Economists initially anticipated around $80-100 billion, but banks accelerated their efforts, particularly in the final days.

Attractive interest rates and leverage incentives helped banks mobilise a staggering $127.226 billion in fresh Foreign Currency Non-Resident (Bank) [FCNR(B)] deposits under the Reserve Bank of India’s concessional swap facility, which was open from June 8 to August 31.

“It’s come as a surprise, as the expectation was that about $80-100 billion would come in,” said Madan Sabnavis, Chief Economist, Bank of Baroda. During the 85-day period, banks raised $65.397 billion between June 8 and August 21, they accelerated efforts in the final 10 days, mobilising another $61.829 billion between August 22 and August 31.

Banks offered interest rates of 6-7.5 per cent on fresh three-to-five-year FCNR(B) deposits, around 300-450 basis points higher than prevailing rates. These deposits were exempt from statutory pre-emptions such as the Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR). Several large banks also offered leverage of up to 19 times the deposit amount to NRIs placing fresh deposits of $1 million and above.

Overall, $136.377 billion was mobilised under the special USD-INR forex swap facility covering FCNR(B) deposits, external commercial borrowings and overseas foreign currency borrowings.

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