Shillong: Indian banks are scrambling for dollars. The Reserve Bank of India just pulled the plug on its swap window early. The original September 30 deadline is now August 31. The central bank blames an encouraging response for the sudden change. The facility has already pulled in $52.3 billion in foreign exchange by mid-August.
The RBI launched the special USD-INR swap on June 8. It covers FCNR(B) deposits, external commercial borrowings, and overseas foreign currency borrowings. By the end of July, the schemes had drawn nearly $41 billion. Now, time is running out. Banks want these inflows badly.
Axis Bank hiked rates on August 17. They now pay 6.40 percent on FCNR(B) deposits over $1 million for three-to-five-year terms. They previously offered 6.25 percent. Smaller deposits under $1 million now earn 6.25 percent.
Federal Bank also changed its rates on August 17. They offer 6.40 percent on US dollar deposits between $500,000 and $3 million for three-to-five-year tenors. Deposits of $3 million or more earn 6.25 percent for three to five years, or 6.40 percent for four to five years.
HDFC Bank and ICICI Bank are using countdown timers on their websites. These clocks show NRI customers the exact time left to lock in these rates. The RBI says the move was driven by the "encouraging response" to the facility, which successfully funneled necessary foreign exchange into the country.
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