India's foreign currency fundraising efforts, primarily through the Foreign Currency Non-Resident (Bank) or FCNR(B) deposit scheme, attracted over $100 billion by the August 31 deadline. This significantly surpassed the Reserve Bank of India's (RBI) initial projection of $80 billion for three special foreign-currency funding routes, which also included Overseas Foreign Currency Borrowings (OFCBs) and External Commercial Borrowings (ECBs). By August 21, data showed that the three routes had already attracted $72.85 billion, with FCNR(B) deposits accounting for $65.4 billion.
The unexpected strong response prompted the RBI to advance the closure of the FCNR(B) window to August 31 from its original September 30 schedule. This inflow has bolstered India's foreign exchange reserves, which reached a record $729.33 billion by the week ended August 21. Chief Economic Adviser V. Anantha Nageswaran noted that the successful mobilization provides strong support to India’s balance of payments and creates a floor for the rupee against the dollar. The rupee appreciated for a fourth consecutive session, gaining 22 paise to ₹94.95 per dollar.
The surge in FCNR(B) deposits has led to Indian banks sharply cutting interest rates on these long-tenure foreign-currency deposits. For example, HDFC Bank reduced its five-year US dollar FCNR(B) deposit rate to 3.15% from 6.25%, a cut of 310 basis points. ICICI Bank made a similar reduction to 2.90% from 6%, and SBI also adjusted its regular five-year FCNR(B) rate to 3.05%. While the FCNR(B) window closed, facilities for ECBs and OFCBs remain open until December 31, 2026.
