Reserve Bank of India Governor Sanjay Malhotra stated that the FCNR(B) deposit program generates net revenue, refuting analyst claims of potential $10,6 billion in hedging losses over five years. The scheme, launched in June 2026, aimed to attract diaspora capital amid currency pressure.
Initial projections for the program ranged from $35 billion to $55 billion. However, total inflows reached $136 billion by August 2026, with $127 billion raised through FCNR(B) deposits. This influx increased India's foreign exchange reserves by approximately 18%.
The program offered interest rates between 6% and 7%, compared to the previous standard of 3.5%. The RBI covered hedging costs for three-to-five-year deposits made between June 8 and September 30, 2026, but ended the incentive early on August 31.
To offset hedging expenses, the RBI plans to invest the funds in overseas government securities. The central bank also intends to manage the resulting domestic liquidity surplus through open market operations and adjustments to bank reserve requirements.
