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FCNR(B) inflows set to hit USD 100 billion, nearly 3X 2013 levels; 76% of mobilisation is fresh money

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FCNR(B) inflows set to hit USD 100 billion, nearly 3X 2013 levels; 76% of mobilisation is fresh money

FCNR(B) inflows set to hit USD 100 billion, nearly 3X 2013 levels; 76% of mobilisation is fresh money

Indian banks have mobilised USD 73 billion through FCNR(B) deposits, ECBs and overseas foreign currency borrowings since June 8, with inflows accelerating to USD 16 billion in just eight days through August 21. Jefferies now expects total mobilisation to reach USD 90-100 billion by August 31, significantly above its earlier USD 70-80 billion estimate. Around 76 per cent of FCNR(B) mobilisation represents fresh money, suggesting the scheme is attracting new foreign currency into the banking system rather than merely replacing maturing deposits.

Indian banks are on track to mobilise as much as USD 90-100 billion through FCNR(B) deposits and other foreign currency borrowing routes by August 31, as the pace of dollar inflows has accelerated sharply in recent weeks, according to a Jefferies report released on Monday. Banks have already mobilised USD 73 billion through FCNR(B) deposits, overseas foreign currency borrowings (OFCBs) and external commercial borrowings (ECBs) between June 8 and August 21, exceeding Jefferies' earlier expectations. The brokerage said banks raised USD 16 billion in just eight days between August 13 and 21, taking the pace of mobilisation to around USD 2 billion a day. Advt

Given the strong response, Jefferies has raised its estimated mobilisation range to USD 90-100 billion, from its earlier expectation of USD 70-80 billion. The Reserve Bank of India had brought forward the closure of the concessional FCNR(B) swap facility to August 31, a month earlier than initially planned, following the strong mobilisation.


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