Banks collect over $25 billion from special swap window

NEW DELHI: India has received about $25 billion through the special concessional swap window for deposits by non-resident Indians and overseas foreign currency borrowings by banks, giving the country some respite in financing of its current account deficit (CAD).

"It would have crossed $25 billion as on date," Resrve Bank deputy governor HR Khan said on Monday on the sidelines of an event organised by the National Housing Bank.

India's current account deficit had widened to over $87 billion in 2012-13, making its currency vulnerable to external headwinds. The finance ministry and the RBI unveiled a slew of measures after the rupee suffered a sharp depreciation against the dollar on apprehensions of withdrawal of monetary stimulus by the US Federal Reserve.

RBI governor Raghuram Rajan had announced the scheme on September 4, the day he took over. The facility is open till November 30. The special window allows banks to swap fresh dollar funds mobilised for a minimum period of three years at a fixed coupon rate of 3.5%.

The Reserve Bank had also allowed banks to borrow up to 100% of their tier-I capital from foreign markets, which can be swapped with the central bank at a concessional rate of 100 basis points below the rate prevailing in the market. Banks can raise these funds if sanctioned by November 30 till December 31.

"There are some multilateral institutions who have taken some time to sanction the loans and release it...so we have given time up to December 31 for banks to take loans under tier-I from international financial institutions, multilateral financial institutions," Khan said.

Asked if the central bank was considering an extension of the dollar-swap facility for oil marketing companies, Khan said, "In a calibrated manner, it is happening. And quite a big chunk is already there in the market...We don't foresee any problem."

The swap windows have helped the rupee gain almost 11% since the measure was announced.

Khan also said the central bank would launch consumer price index-based bonds aimed at protecting the savings of retail investors from the impact of price rise by the end of next month.

"Guidelines will be out soon...We are likely to launch the first tranche before end of December. We will come out with details (quantum)," he said, adding that the size of the issue could be 10,000-15,000 crore.

Inflation-indexed bonds were designed to offer investors an option to guard their savings against price rise and dissuade them from buying gold.

The bonds are part of the government's borrowing programme.

The government had announced plans to issue 12,000-15,000 crore of inflation-indexed bonds with 10-year maturity in tranches during the current financial year. While the first series of bonds was open to all categories of investors, the second series will be exclusively for retail investors.