The Reserve Bank of India has brought forward the deadline for its special foreign-currency deposit scheme, driven by faster-than-expected inflows, signalling a shift in foreign exchange management strategies.
The Reserve Bank of India has brought forward the cut-off for its special foreign-currency deposit window, ending fresh mobilisation of foreign currency non-resident bank deposits on August 31 rather than September 30, after inflows came in faster than expected. According to the Economic Times, the central bank had received $52.30bn through FCNR(B) deposits by August 13, prompting it to shorten the timetable.
The scheme was designed to draw in overseas currency from non-resident Indians and ease pressure on the rupee by allowing banks to raise three- to five-year FCNR(B) deposits at lower hedging cost. Business Standard reported that the facility was announced in early June and became operational on June 8, with deposits originally meant to qualify if mobilised by the end of September.
Under the revised schedule, the swap facility will still be available for deposits raised by August 31, and banks will be able to use the RBI swap window until September 11. The broader swap support for external commercial borrowings and overseas foreign currency borrowings remains unchanged and is set to run until December 31, 2026, as planned.
Industry reports also show the central bank has tightened reporting around the programme. Business Standard said banks must now provide daily details of FCNR(B), ECB and OFCB mobilisation under the concessional swap arrangements, while ICICI Direct said the scheme carries a one-year lock-in and no cancellation option, with deposits exempt from cash reserve ratio and statutory liquidity ratio requirements.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
