RBI advanced the FCNR‑B swap window deadline to Aug‑31, driving total foreign‑currency inflows to over $72 billion (FCNR‑B $65 billion, ECB $2.6 billion, OFCB $4.9 billion).
HDFC, ICICI and HSBC are offering leverage up to 19× on FCNR‑B deposits to attract foreign investors.
The move follows RBI’s June 2024 measures to reduce hedging costs and expand concessional swap facilities, marking the highest mobilization since the 2013 scheme.
RBI Boosts Foreign Currency Inflows The Reserve Bank of India (RBI) has accelerated the deadline for the concessional swap window on FCNR‑B deposits to August 31, a move that has spurred a record inflow of foreign currency into the country. Total inflows through RBI‑announced measures have topped $72 billion, with $65 billion coming from FCNR‑B deposits alone. Additional contributions include $2.6 billion from external commercial borrowings (ECBs) and $4.9 billion from overseas foreign currency borrowings (OFCBs).
Banks Mobilise Deposits with Aggressive Leverage In response to the expanded swap window, major banks are offering attractive leverage to foreign investors. HDFC Bank and ICICI Bank have introduced nine‑fold leverage on FCNR‑B deposits, while HSBC Bank is extending up to 19‑fold leverage. These incentives are part of a broader strategy to capture the heightened demand for foreign‑currency deposits, which now surpass the $26 billion mobilised under the 2013 scheme.
Implications for Investors and the Banking Sector The RBI’s policy shift reflects its intent to strengthen the external sector and provide a stable source of foreign currency for Indian banks. For investors, the enhanced leverage options and reduced hedging costs present a compelling case to place FCNR‑B deposits. Banks, meanwhile, will likely see a boost in their foreign‑currency asset base, potentially improving liquidity and funding structures. Overall, the move signals a proactive stance by the RBI to manage external liquidity while offering attractive opportunities to foreign investors.
