Negative impactEconomy
How much will the FCNR scheme cost the RBI?
Economic Times 5 hrs ago·8 Sept 2026, 1:30 am
The Reserve Bank of India (RBI) is reviewing the Foreign Currency Non-Resident (Bank) (FCNR(B)) scheme, a popular route for non-resident Indians to park foreign currency. The central bank is concerned because banks have mobilised a record $127 billion in deposits under this scheme, which is significantly higher than the $65-70 billion initially projected. This massive inflow creates a liability for the RBI, as it must ensure the rupee remains stable against the dollar. The government is now considering raising the tax rate on these deposits to manage the liability and encourage a smoother exit for investors.
This development is important for the broader market as it signals a shift in policy to curb speculative inflows. For investors, it highlights the volatility of foreign currency deposits. The move to increase tax rates is a tool to discourage large, short-term capital inflows that can put pressure on the rupee. Investors should watch for the final policy announcement and the resulting impact on the currency market and banking sector liquidity.
Key takeaways
- Category: Economy.
- AI reads the tone as negative (potentially bearish) for the stock.
- Assessed as a significant, market-relevant update.
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