RBI special windows seen big enough to bring in $100B

Mumbai: India's latest suite of dedicated forex-inflow programmes could net about $100 billion, nearly three times the proceeds from the last such exercise during the 2013 taper tantrum, if the special drives retain the early momentum displayed so far, market experts and economists said.

"If the current pace of FCNR(B) inflows, as reflected in the central bank data, continues, we may well see three-digit US dollar billion mobilisation, significantly exceeding the initial estimates of $50-60 billion," said VRC Reddy, head of treasury, Karur Vysya Bank. "The momentum so far has been a pleasant surprise."

The Reserve Bank of India (RBI) Saturday said the special programmes between them had mobilised $40.81 billion in foreign exchange inflows up to July 31. Of this, FCNR(B) deposits accounted for $36.72 billion, despite the current programme having been operational only since June 8. The strong response has prompted economists to raise their estimates of the eventual mobilisation under the scheme.


"The cumulative inflows across FCNR(B), ECB and OFCB could reach $90 billion or even higher. Collections so far have been much stronger than expected," said Gaura Sengupta, chief economist, IDFC First Bank.

She has consequently revised FY27 balance of payments surplus forecasts to $40 billion from $25 billion earlier.

The dedicated facilities, announced by the RBI on June 5 and operationalised on June 8, provide concessional foreign exchange swaps to banks to encourage capital inflows, support the balance of payments, cushion the rupee and contain imported inflation. The FCNR(B) window remains open until September 30, while the ECB and OFCB windows will remain available until December 31.

Robust Flows
"We continue to see up to $75 billion being raised under these concessional schemes, helping fund the current account gap, with a possible balance of payments surplus of nearly $35 billion in FY27," said Madhavi Arora, chief economist at Emkay Global Financial Services.

Madan Sabnavis, chief economist, Bank of Baroda, estimates the overall mobilisation around $70 billion. "We believe around $70 billion can come through the total window, with $50-60 billion from FCNR(B) alone and another $10 billion from ECB and OFCB, though those flows are likely to pick up only after September," he said.