Neil Borate@ActusDei
India's FCNR scheme is falling short, and that gives NRIs some bargaining power
The FCNR(B) scheme (Dollar Deposits from NRIs), RBI's go-to for rupee support since the 2013 taper tantrum has mobilised just $3.08 billion so far from disclosed numbers. Original estimates pegged this scheme at $50-70 billion. That's not a shortfall, that's a scheme running at a fraction of its target with the window closing September 30, 2026. For NRIs, that gap is leverage literally and figuratively.
Some points to note:
→ Only a handful of banks have disclosed numbers, and each has a long way to go to achieve their target.
PNB: $425mn raised against a $2.5bn target. Indian Bank: $140mn against $2bn. Union Bank: $106mn against $2bn.
If a bank is telling you its target, it's also telling you how much room it has left to fill.
→ HDFC, ICICI, Kotak, Federal, and Yes Bank haven't disclosed their numbers publicly. That doesn't mean the appetite isn't there. It means you have to ask and compare, bank to bank, rather than assume one is offering the best deal.
→ Leverage on these deposits ranges from 8-12x at Indian banks, up to 19x at some overseas institutions, a meaningful difference depending on where you bank.
→ The leverage math isn't universal. FCNR interest is taxed on a gross basis for most NRIs, and per HDFC Bank's own CEO, leveraged positions mainly pencil out for depositors in the Gulf and Singapore. If you're in the US, UK, or Australia, the tax treatment in your country of residence changes the calculation, even though the interest itself is tax-free in India.
The bottom line: banks are competing for NRI dollars right now, with roughly ten weeks left on the incentive window and the system nowhere near its mobilisation target. Most depositors don't realise how much negotiating room that gives them.
We will guide you through this, including the risks to watch out for. Schedule a call with us on thefynprint website.
Sources: Hindu Business Line, Mint, ET HDFC Bank management commentary.
#NRI #FCNR
