FCNR(B)

Large banks may offer up to 9x leverage against FCNR(B) deposits, potentially helping NRIs earn double-digit returns under the RBI's swap scheme

Today's opinions examine RBI incentives for FCNR deposits, the economic legacy of Brexit, India's trade strategy, institution-building for growth and lessons from successful founders

Certificate of deposit issuances crossed Rs 1 trillion in the fortnight ended June 15 as banks sought funding amid a widening gap between credit and deposit growth

Central bank permits loans and standby letters of credit against FCNR(B) deposits under the swap facility, while leaving leverage decisions to lenders

The Reserve Bank of India (RBI) on Tuesday said the swap facility for foreign currency non-resident deposits (FCNR) is a simple foreign exchange swap, but only covers the original principal amount, not the interest. The RBI also said banks are permitted to extend loans to the FCNR (B) account holders and mark a lien on such deposits, the central bank said in FAQs on Swap Facility for FCNR (B) deposits, External Commercial Borrowings and Overseas Foreign Currency Borrowing. On June 8, the RBI introduced a special US dollar-rupee forex swap scheme to enable banks to mobilise fresh FCNR (B) deposits without hedging risk, a move aimed at attracting foreign capital. Banks have been permitted to offer higher returns on dollar deposits in an FCNR(B) Account with a tenure of three to five years. Foreign Currency Non-Resident (Bank) deposits help NRIs earn in foreign currency while protecting savings from rupee depreciation risk. "Reserve Bank of India will be providing a Forex Swap for the

While FCNR(B) deposit inflows fell sharply from a year earlier, overall inflows into non-resident deposit schemes edged up, supported by growth in NRE deposits

SBI rolled out a 9x leverage facility under RBI's FCNR(B) scheme as India's forex reserves fell sharply on lower gold valuations

FCNR(B) deposits have lost ground in NRI portfolios over the past decade, prompting the RBI to ease rate restrictions to attract fresh inflows

Private-sector lender increases FCNR(B) deposit rates following RBI's forex swap facility and temporary removal of the interest rate ceiling on eligible deposits

Banks have been asked to furnish daily details of FCNR(B) deposits, ECBs and OFCBs mobilised under the RBI's concessional swap facilities announced on June 8

Banks, especially smaller lenders, may raise FCNR(B) deposit rates further after RBI temporarily removed the interest-rate ceiling on select maturities

The central bank has temporarily withdrawn interest rate ceilings on select FCNR(B) and NRE deposits, giving banks greater flexibility to attract NRI funds

The state-owned lender has increased rates across key maturity buckets, offering a peak return of 6.25 per cent on five-year FCNR(B) deposits

Brokerages estimate leveraged FCNR(B) deposits could generate annual returns of up to 27 per cent for NRIs while helping banks attract $30-60 billion in fresh foreign currency inflows

Lenders are raising FCNR(B) deposit rates following the RBI's special swap window, with some private banks offering rates above 6 per cent to attract NRI inflows

Major lenders have increased FCNR(B) deposit rates after the RBI offered to absorb hedging costs, a move aimed at attracting foreign currency inflows from NRIs

Bankers expect FCNR(B) inflows of $20-45 billion as RBI absorbs hedging costs, though a much narrower India-US interest-rate differential may limit leverage-driven participation

The currency recovered from recent losses and bond yields softened as lower crude prices and expectations of fresh foreign inflows improved market sentiment

The facility will allow banks to raise fresh three- to five-year FCNR(B) deposits at lower hedging cost, helping support foreign inflows and the rupee

The forex swap window, open until October 2026, will enable banks to mobilise fresh FCNR(B) deposits while the RBI bears the hedging cost on eligible inflows