According to Vinod Nair, head of research at Geojit Investments, RBI’s FCNR(B) scheme has improved the outlook for banks by absorbing hedging costs (around 3.0-3.5%) on fresh 3–5-year deposits, enabling higher deposit rates and potentially mobilizing over $50 billion. This is expected to ease funding pressures, support credit growth, improve liquidity, and moderate the elevated credit-to-deposit (CD) ratios, he said.
