Daijiworld Media Network - Mumbai
Mumbai, Aug 23: Indian banks have mobilised $72.85 billion in foreign-currency inflows under the Reserve Bank of India's (RBI) special USD-INR forex swap facility as of August 21, with foreign exchange mobilisation accelerating sharply in recent weeks, according to the latest RBI data.
Foreign Currency Non-Resident (Bank), or FCNR(B), deposits accounted for $65.4 billion of the total inflows. Overseas Foreign Currency Borrowings (OFCBs) contributed $4.86 billion, while External Commercial Borrowings (ECBs) accounted for $2.59 billion.
The mobilisation has increased rapidly since the end of July. Total inflows rose from $40.8 billion on July 31 to $56.9 billion on August 13 and $72.8 billion on August 21. This means banks mobilised about $32 billion in just three weeks.
FCNR(B) deposits, which formed the bulk of the mobilisation, increased from $36.7 billion on July 31 to $52.3 billion on August 13 and $65.4 billion on August 21. The latest weekly increase was around $13.1 billion, following a $15.6-billion rise in the preceding week.
Among banks, HSBC, State Bank of India, ICICI Bank and HDFC Bank have emerged as major mobilisers, with other large private-sector lenders also stepping up efforts to tap their non-resident Indian customer networks.
Bank-wise data for the period from June 5 to July 30 showed HSBC as the largest incremental mobiliser with about $6 billion, followed by SBI at $4 billion and ICICI Bank at $3.7 billion. HDFC Bank added $1.4 billion, while Kotak Mahindra Bank and Axis Bank mobilised $1.7 billion and $1.6 billion respectively.
The strong mobilisation has also contributed to a rise in India's foreign exchange reserves. Reserves increased by nearly $10 billion in the week ended August 15, reaching $716.9 billion, according to RBI data cited by Reuters. Bankers expect the reserves to move above the previous record of around $728.5 billion by the end of August if the current inflow momentum continues.
The strong response to the facility prompted the RBI to advance the closure of the FCNR(B) mobilisation window. When the special facility was introduced on June 8, banks were initially allowed to mobilise eligible deposits until September 30. The RBI later decided that only deposits mobilised up to August 31 would qualify, while corresponding swaps for eligible FCNR(B) deposits can be undertaken with the RBI until September 11.
The facility covering ECBs and OFCBs, however, will remain available until December 31, 2026. The RBI said the change in the FCNR(B) deadline was prompted by the "encouraging response" and the resulting foreign exchange inflows.
The special USD-INR swap facility was introduced to encourage banks to bring more foreign currency into the country at a time when the rupee and India's external financing conditions were under pressure. It allows banks to raise foreign-currency funds while obtaining a concessional mechanism to manage much of the associated currency risk.
Fresh FCNR(B) deposits with a maturity of three to five years qualify for the concessional USD-INR swap facility. Eligible deposits also receive regulatory relief on cash reserve ratio (CRR) and statutory liquidity ratio (SLR) requirements.
The latest mobilisation underscores the strong response from banks and overseas depositors to the RBI's measures and provides an additional boost to India's foreign exchange liquidity and reserves.