The Reserve Bank of India 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 Reserve Bank of India. It has been decided accordingly 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.

Further, based on requests received from banks, 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 can be swapped with Reserve Bank of India at the option of the Bank at a concessional rate of 100 basis points below the ongoing swap rate prevailing in the market.

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

Detailed operational instructions and changes in the extant regulations will follow.

Sabeeta Badkar

Assistant Manager

Swap window for FCNR(B) dollar funds enables concessional swaps and raises overseas borrowing limits to incentivise long-term foreign currency deposits. A special concessional swap window is available for fresh FCNR(B) dollar funds mobilised for a minimum three-year tenor, allowing banks to swap such funds with the Reserve Bank at a fixed concessional rate for the deposit tenor. Simultaneously, the overseas borrowing limit is raised to 100 percent of unimpaired Tier I capital, and borrowings under this provision may be swapped with the Reserve Bank at a concessional rate below the prevailing market swap rate; both measures are time-bound and detailed operational instructions will follow.