Neutral impactEconomy
RBI's early FCNR(B) deposit scheme closure 'data-driven' or a policy U-turn? Governor Malhotra explains
Economic Times 1 hr ago·20 Aug 2026, 3:20 am
The Reserve Bank of India (RBI) has decided to close the Foreign Currency Non-Resident (Banks) (FCNR(B)) deposit scheme early. This move allows banks to offer higher interest rates on these deposits to attract foreign capital. The central bank stated that the decision is based on data showing stronger than expected dollar inflows into the country.
This policy shift is significant for investors as it signals the RBI's proactive approach to managing the rupee. By making these deposits more attractive, the central bank aims to bolster foreign exchange reserves and ensure stability in the currency market. It reflects a shift in strategy to leverage current market conditions.
Investors should watch for how this impacts the rupee's volatility and the broader foreign inflows into India. The RBI's commitment to managing exchange rate risks remains a key focus for market participants.
Excerpt from Economic Times
RBI Governor Sanjay Malhotra defended the FCNR(B) deposit scheme's early closure. He stated the decision was data-driven and a prudent calibration. This move aims to attract $80 billion into India's economy. The central bank cited stronger than expected dollar inflows for the adjustment. The RBI remains committed to…Read the original at Economic Times
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