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RBI says banks mobilised near 32 billion dollars via FCNR
The Hindu··27 Jul
RBI Governor Sanjay Malhotra said banks have mobilised nearly 32 billion dollars, largely through Foreign Currency Non-Resident deposits, while foreign investment in government securities has crossed 7 billion dollars since June policy measures. He dismissed concerns that inflows merely recycle existing deposits, saying the central bank has adequate tools to manage resulting liquidity and has insured itself against currency risk.
Prism
What It Means For You
- NRIs weighing FCNR(B) deposits now have official data showing strong recent investor response to these instruments.
- A steadier rupee outlook could mean more predictable prices for imported goods and foreign travel for consumers.
- Savers watching interest rates can expect the RBI to prioritise inflation control over quick rate cuts for now.
What's Happening
- RBI Governor Sanjay Malhotra said banks have mobilised nearly 32 billion dollars, largely through FCNR(B) deposits.
- Foreign investment in government securities has crossed 7 billion dollars since the June policy measures were introduced.
- Malhotra dismissed concerns that these inflows merely represent a recycling of existing deposits within the banking system.
Reading the Governor's Confidence in the Rupee
- Malhotra said the RBI does not target any specific exchange rate and intervenes only to curb excess volatility.
- He described the rupee as undervalued in both nominal and real effective exchange rate terms currently.
- He cited the current account surplus, robust services exports and improving foreign investment as signs of strength.
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