Mumbai: The Reserve Bank has announced a special window to swap foreign currency non-resident (FCNR) dollar funds to boost foreign fund inflows and help banks get funds at cheaper rate.
"We will offer a window to banks to swap the fresh FCNR-B dollar funds, mobilised for a minimum tenor of three years and over, at a fixed rate of 3.5 per cent per annum," the newly-appointed Governor Raghuram Rajan said.
The central bank also hiked the current overseas borrowing limit of 50 per cent of unimpaired Tier I capital to 100 per cent.
"The borrowings mobilised under this provision can be swapped with Reserve Bank at the option of the bank at a concessional rate of 100 basis points below the ongoing swap rate prevailing in the market. Both the schemes will be open up to November 30," Rajan said, adding, "RBI reserves the right to close the scheme earlier with due notice."
Rajan also emphasised the need for internationalization of the rupee.
"This might be a strange time to talk about rupee internationalisation, but we have to think beyond the next few months," he said.
With the expansion of the country's trade, the central bank would push for more settlements in local currency, he added.
"This will also mean that we will have to open up our financial markets more for those who receive rupees to invest it back in," he said, adding the central bank will continue on the path of steady liberalisation.
