RBI forex swap measures may attract $60-70 bn inflows, says Ind-Ra

The RBI's forex swap measures on FCNR (B) deposits and ECBs by state-owned companies could attract USD 60-70 billion in foreign capital and support the rupee, India Ratings and Research (Ind-Ra) said on Wednesday. The central bank, on June 8, announced that authorised dealer banks can access the RBI's swap facility for Foreign Currency Non-Resident (Bank) (FCNR (B) deposits with maturities ranging from 3-5 years till September 30. The facility would allow banks to swap US dollar deposits with the regulator and manage currency risks. The slew of measures announced by the RBI to shore up foreign capital inflows includes a concessional forex swap facility to encourage PSUs to raise ECBs until September 30. Ind-Ra said FCNR (B) is likely to play a key role in mobilising foreign capital, with the RBI bearing hedging costs, and banks can offer better returns to overseas depositors. "Ind-Ra expects the arrangement to generate sizeable inflows, potentially in the range of USD 60-70 billion

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