Helios Capital founder and fund manager Samir Arora on Tuesday urged the Reserve Bank of India (RBI) not to significantly expand its FCNR(B) deposit mobilisation despite strong inflows. He said the central bank should instead consider closing the scheme early to signal confidence in India's external position.
The inflow under the FCNR(B) scheme has already touched $60 billion, and market participants are speculating that deposits could rise to as much as $80-90 billion. However, Arora said the RBI should stop at around $60 billion, or whatever level it considers appropriate.
"With the success of the FCNR deal so far, markets are talking about a much larger raise (maybe US$ 80-90 billion)," he wrote in a post on X. "I hope RBI does not do that and in fact closes the scheme early at say US$ 60 billion (or whatever) to signal that India can raise money during a crisis at short notice and is in fact in a position to even refuse USD coming in."
Arora also proposed that the RBI create a dedicated FCNR redemption reserve to prepare for repayments when the deposits mature in three to five years. He said markets could begin worrying about large foreign currency outflows well before the deposits mature, potentially turning them into a source of uncertainty.
"I suggest that the RBI make a clearly defined FCNR redemption reserve where they put aside US$ 3 billion a month (or whatever number is required over 3/5 years) to cover repayment of principal plus interest," he said. The veteran fund manager added that India's foreign exchange reserves should be reported net of this reserve, arguing that the repayments are a known future obligation.
स्रोत: businesstoday.in
