FCNR (B) deposits may have surpassed 2013 level of $26 billion in just 45 days: SBI report
New Delhi, July 27
India may receive FCNR deposits in the range of $65-70 billion by the end of the RBI scheme on September 30, and overall $80-$85 billion, an SBI Research report said on Monday.
The RBI figure of $20 billion inflows (till July 17) came as a positive reprieve, chiefly with a smart FCNR (B) corpus of $17.4 billion.
"We now estimate that FCNR (B) since then has already crossed 2013 level of $26 billion in just 45 days," said Dr. Soumya Kanti Ghosh, Group Chief Economic Adviser, SBI.
The RBI data indicates that FCNR (B) deposits worth $17.4 billion have been mobilised till July 17, 2026 and trend suggests that PSBs are major drivers of this mobilisation.
"We also believe that significant majority of existing FCNR deposits which are going to mature in August/September 2026 will be renewed under the new scheme (gravitated by higher interest rates) and will boost the FCNR (B) inflows," the report mentioned.
Preliminary estimate indicate that amount worth $10 billion on a conservative basis in addition to base line estimates are going to be mobilised mostly through those economies where tax concessions are available.
"Nevertheless, given the current trend we believe that total amount mobilised so far in 45 days has easily crossed the total amount mobilised in 2013 in three months," the report noted.
However, broader markets are still wrestling with the co-relation of these flows with first FCA position and why the exchange rate has continued to weaken even after such strong capital inflows.
Public Sector Banks, front led by larger banks, are apparently anchoring the drive, ensuring incremental flows by leveraging not only the deposits, but also the trust built with materially significant clientele (credit worthiness and risk profile duly factored) spread across various geographies and remaining tacitly agile by shifting their strategy to an optimally blended Onshore-Offshore game plan.
The RBI intervention in the foreign exchange market has been somehow sporadic and not full throttled ever since the disturbances in West Asia has broken out.
"Rupee has moved 360 degrees; from being a shock absorber to not being a shock absorber. It is therefore important to not let the Rupee travel 360 degrees again but ensure its implied resilience to checkmate exogenous shocks without losing competitiveness," the report said.
This is important given frictions in trade and supply/value chains, geopolitical risks and skewed capital flows.
— IANS
Reader Comments
Waah! 45 days to beat 3 months of 2013 is impressive. But the real question is whether these deposits are genuine NRI money or just round-tripping from domestic accounts. Banks love the fees, but we need transparency. The Rupee weakening despite $17 billion inflows is baffling. Something doesn't add up... 🤔
As an NRI, I'm watching this closely. The higher interest rates are tempting, but the Rupee depreciation is eating into returns. For us earning in dollars, the net gain after conversion and taxes isn't that attractive. SBI should clarify how much of this is actual new money vs renewals from existing depositors.
PSBs leading the charge is good news for public sector banking credibility. But I worry about the "materially significant clientele" mentioned - feels like HNI accounts are getting VIP treatment while regular depositors struggle with low rates. Also, the geopolitical risks from West Asia mentioned in the report need serious attention. We can't ignore that. God bless the economy! 🙏
Comparing 2023 to 2013 is misleading. 2013 was a crisis year with the taper tantrum, so any positive comparison is like saying we're better than a disaster. The real test is whether these inflows will stay when interest rates normalize. I'm skeptical. The Rupee's 360-degree swing mentioned in the report is a red flag.
Finally some good economic news! ₹17.4 billion in FCNR deposits shows NRIs still trust India. But the report saying Rupee has "gone 360 degrees
We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.