Mumbai, Sept. 2 -- India has mobilised a record $127.23 billion through foreign-currency deposits from non-resident Indians under a special Reserve Bank of India (RBI) programme aimed at strengthening foreign-exchange liquidity amid global financial uncertainty. The strong response led the central bank to close the facility a month ahead of schedule.

FCNR(B) deposits brought in $127.226 billion as of August 31, according to provisional RBI data released on Wednesday. Including overseas foreign-currency borrowings (OFCB) and external commercial borrowings (ECB), total funds raised under the measures stood at $136.377 billion.

The RBI had opened the FCNR(B) window on June 8 and planned to keep it available until September 30. It closed the facility on August 31 after saying its objective had been achieved earlier than expected.

FCNR(B) deposits allow NRIs to keep fixed-term savings with Indian banks in foreign currencies, with both principal and interest repaid in the same currency. This protects depositors from direct rupee exchange-rate risk while giving Indian banks access to foreign-currency funds. The RBI measures included absorbing banks' hedging costs for mobilising these deposits and allowing banks to lend against the funds. OFCBs contributed another $5.26 billion, while ECBs accounted for $3.891 billion.

Private lender ICICI Bank said separately that it had mobilised $17.88 billion in gross FCNR(B) deposits by August 31. International branches and subsidiaries of the bank provided $9 billion in loans against these deposits, while standby letters of credit linked to such loans stood at $3.63 billion.

The latest mobilisation is much larger than the RBI's 2013 response to the "taper tantrum", when a special FCNR(B) swap scheme attracted about $26 billion in nearly three months as the rupee came under heavy pressure.

The latest inflows come as India's foreign exchange reserves reached a record $729.328 billion in the week ended August 21, rising $12.422 billion. Banking-system surplus liquidity also climbed to nearly Rs 5 lakh crore by the end of August, its highest level in more than four months.

India's economy grew 7.8 per cent in April-June, above the RBI's 7 per cent forecast, despite global geopolitical and economic uncertainty.

Published by HT Digital Content Services with permission from Millennium Post.