FCNR(B) Deposits Act as Insurance Policy, But Repayment Risks Exist: Uday Kotak
· Business · Business Standard
Uday Kotak, founder of Kotak Mahindra Bank, stated that Foreign Currency Non-Resident (Bank) or FCNR(B) deposits serve as a strong insurance policy for India. He highlighted that these deposits allow India to borrow in foreign currency from its own citizens residing abroad. However, Kotak also pointed out that repayment risks loom, particularly if the rupee depreciates significantly. He emphasised that the Reserve Bank of India (RBI) provides a swap window for FCNR(B) deposits, which helps mitigate currency risks for banks.
Why it matters
FCNR(B) deposits are crucial for India's foreign exchange reserves and financial stability. The potential repayment risks, especially with rupee depreciation, could impact the banking sector and the national economy.
Read the original report — Business Standard
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