India Attracts $136 Billion in Foreign Exchange Inflows via RBI Scheme
2 sources · India
Who reported this
- Scroll.in
- Hindustan Times
What the colours mean
- Left
- Centre-left
- Centre
- Centre-right
- Right
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Every source for this story reports from India.
India attracted $136.3 billion in foreign exchange inflows through special measures introduced by the Reserve Bank of India (RBI), the central bank announced on Wednesday. The majority of these funds, totaling $127.2 billion, came from Foreign Currency Non-Resident Bank (FCNR(B)) deposits targeting non-resident Indians. Additionally, overseas foreign currency borrowings contributed $5.3 billion and external commercial borrowings added $3.9 billion. The FCNR(B) component of the scheme ended on August 31, while the other two schemes remain open until December 31.
The inflows have had significant impacts on the domestic banking system and national reserves. Foreign exchange reserves reached a record $729.3 billion in the week ending August 21. The surge in liquidity reduced the need for banks to raise short term funds through certificates of deposit (CDs), causing CD rates to drop. Three month CD rates fell to 6.3 percent from a range of 7.09 to 7.23 percent seen when the scheme was announced on June 5.
Outlets with a center right lean framed the event as a resounding success for an ambitious plan that lowered borrowing costs for banks and reduced their reliance on wholesale funding. Conversely, outlets with a left lean framed the event as a strategic move to strengthen the central bank's ability to defend the rupee against external shocks and global headwinds, specifically citing pressure from elevated energy prices and the war in West Asia.
How each side framed it
- Left
- Focused on the strategic importance of the inflows for stabilizing the rupee and protecting against global economic shocks.
- Centre-right
- Focused on the success of the scheme in boosting banking liquidity and lowering short term interest rates.
Sources
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