India’s foreign exchange reserves have reached a record $729.3 billion after non-resident Indians deposited more than $100 billion under the RBI’s FCNR(B) scheme.
The Reserve Bank of India had introduced the special window in June to attract foreign currency deposits from NRIs. The response exceeded expectations, with inflows crossing the $100-billion mark by August 31.
The RBI had initially expected around $80 billion in deposits and planned to keep the scheme open until September 30. However, the strong response led to the window being closed a month earlier.
The FCNR(B) scheme allows NRIs to deposit overseas earnings in foreign currencies without converting them into Indian rupees. This protects depositors from currency fluctuations.
The large inflows have strengthened India’s forex reserves at a time of volatile global oil prices and pressure on the rupee. The stronger reserve position also gives the RBI more flexibility to intervene in currency markets and support the Indian rupee.