The Reserve Bank of India (RBI) has decided to close its special foreign currency non-resident bank (FCNR(B)) deposit scheme a month earlier than initially planned. The facility, launched on June 8 to attract foreign currency inflows, will now accept deposits only until August 31 instead of the earlier deadline of September 30. The scheme has attracted $52.3 billion in foreign currency deposits as of August 13, according to livemint.com.
The FCNR(B) scheme was introduced on June 5 and implemented from June 8 to encourage foreign exchange inflows amid dollar liquidity pressures. RBI Governor Sanjay Malhotra had previously stated there was no plan for premature closure, but the rapid inflows prompted the central bank to shut the scheme early. The RBI’s decision aims to manage the surge in foreign currency deposits and maintain monetary stability, the report added.
This early closure highlights the strong demand for foreign currency deposit schemes amid global dollar volatility and capital flows. The $52.3 billion raised under the FCNR(B) scheme in just over two months underscores the attractiveness of such instruments for non-resident Indians and foreign investors. The RBI’s move aligns with efforts by central banks globally to balance foreign exchange reserves and manage currency fluctuations.
The FCNR(B) scheme will now close to new deposits on August 31, marking a significant milestone in RBI’s foreign exchange management strategy. The central bank will continue to monitor foreign currency inflows and adjust policies accordingly, as detailed in the August 14 report by livemint.com.