RBI Governor Sanjay Malhotra
| Photo Credit:
Umesh Goswami
The Reserve Bank of India’s recent measures to attract foreign capital have garnered strong investor response, with banks mobilising nearly $32 billion, largely through FCNR(B) deposits, while government securities have attracted more than $7 billion in foreign inflows since the June policy measures, RBI Governor Sanjay Malhotra has said.In an interview with businessline, Malhotra dismissed concerns that the inflows merely represent a recycling of existing deposits. He added that the RBI has adequate tools to manage any resulting liquidity. The inflows have strengthened India’s external position amid heightened geopolitical uncertainty and volatile global capital flows.Responding to concerns over the RBI bearing the hedging cost of fresh FCNR(B) deposits and offering concessional forex swaps for external commercial borrowings (ECBs) by public sector entities, Malhotra said: “It is not something which should be a matter of concern because we have a foolproof system of insuring ourselves. So, whatever dollars we get, the excess foreign currency is invested in foreign assets. The risk, therefore, is not there.”
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