RBI lets banks offer loans to nonresidents against FCNR(B) deposits
The Reserve Bank of India (RBI) is letting banks offer loans or guarantees to nonresidents against their FCNR(B) deposits, a strategy to bring in more US dollars and steady the rupee.
This scheme kicked off on June 5 and runs until September 30.
Banks can offer higher FCNR(B) rates
Banks can now raise FCNR(B) deposits for three to five years, with the RBI covering foreign exchange hedging costs.
That means banks can offer higher deposit rates and make these deals even more attractive.
Wealthy NRIs and bankers are already showing interest: leveraging a $1 million deposit could earn returns up to 21.8% per year.
A similar scheme in 2013 saw the banking industry raise $34 billion, with major beneficiaries including HDFC Bank ($3.4 billion), SBI ($3.07 billion), and ICICI Bank ($2 billion).