India's central bank will close a discounted forex swap facility for banks to hedge overseas deposits raised from non-resident Indians a month earlier than planned, following robust inflows of more than $50 billion.
Banks will now be allowed to tap the zero-cost hedging facility for overseas FX deposits raised by August 31, compared with the earlier date of September 30, according to an RBI statement on Friday.
The FX swap was part of a raft of measures announced in June to boost India's balance of payments.
The decision has been taken "based on the encouraging response to the swap facility for FCNR(B) deposits and the resultant forex inflows," the central bank said.
The RBI measures included concessional hedging facilities to encourage overseas fundraising by state-run firms and banks.
Here are the details of the inflows drawn between June 8 and August 13:
- The RBI said it received $52.3 billion via FCNR deposits raised by banks
- $1.7 billion had been raised via swap facilities for external commercial borrowings and $2.8 billion through overseas foreign currency borrowings undertaken by authorized lenders
- The window for these two types of borrowings was slated to be open until the end of the year and that remains the case, the central bank said
- Analysts had anticipated the measures would draw a combined total of between $50 billion and $80 billion
