RBI to open a swap window to attract FCNR (B) dollar funds

The Reserve Bank of India has decided to open a special window to facilitate the conversion of dollar deposits to rupee by banks, RBI said in a release today.

The central bank said it has been receiving requests from banks to consider a special concessional window for swapping foreign currency non-resident (banks) {FCNR(B)} deposits that will be mobilised as per the recent relaxations permitted by the RBI.

Accordingly, it has been decided to offer such a window to the banks to swap the fresh FCNR (B) dollar funds, mobilised for a minimum tenor of three years and over at a fixed rate of 3.5 per cent per annum for the tenor of the deposit, the release said.

Further, based on banks' requests, it has also been decided that the current overseas borrowing limit of 50 per cent of the unimpaired Tier I capital may be raised to 100 per cent and that the borrowings mobilised under this provision may be allowed to be swapped at the option of the bank at a concessional rate of 100 basis points below the ongoing swap rate prevailing in the market, it added.

The above schemes will be open up to 30 November 2013. Reserve Bank of India reserves the right to close the scheme earlier with due notice.

RBI said it would issue detailed operational instructions and changes to the extant regulations later.