RBI gets $22.7 bn in forex under special swap windows

The central bank had announced such schemes to boost sentiment in the foreign exchange market and attract dollar flows. It is yet to specify how much it has collected under each window

So far, the Reserve Bank of India (RBI) has received $22.7 billion under the special concessional window to swap fresh foreign currency non-resident (bank), or FCNR (B) deposits and foreign currency borrowings.

On September 4, RBI had announced these schemes to boost sentiment in the foreign exchange market and attract dollar flows. Both swap windows are open till November 30. The central bank is yet to specify how much it has collected under each window.

Under the FCNR (B) window, banks can swap fresh dollar funds (deposits with a maturity period of at least three years) at a fixed rate of 3.5 per cent a year for the tenure of the deposit. RBI has entered into swap arrangements with banks for the principal amount to be brought under FCNR (B). It had also opened another window through which banks could swap fresh borrowings against Tier-I capital, at one per cent less than market rates.

In September, RBI received $4.1 billion in FCNR (B) deposits, while total non-resident Indian (NRI) deposits increased $10 billion.

In August and September, the central bank had taken many steps to attract foreign exchange, which would help stem the fall in the rupee. In August, it had allowed banks to offer interest without any ceiling on non-resident (external) rupee, or NRE, deposits with maturities of at least three years. Banks would not have to maintain cash reserve ratio or statutory liquidity ratio for any incremental NRE and FCNR (B) accounts. RBI also raised the interest ceiling for FCNR (B) deposits for three-five-year maturities by 100 basis points — to 400 basis points more than the London Interbank Offered rate (Libor).