KOLKATA: International liabilities of Indian banks in rupeeterms rose by 36 per cent year-on-year in December 2013 as Indians living abroad parked their surplus funds heavily into foreign currency non-resident (bank) (FCNR(B)) deposits, RBI said in a report Friday.
The Reserve Bank of India has last year deregulated interest rate on FCNR-B deposits for one-to-three-year and three-to-five-year maturities to allow banks offer higher rates to overseas depositors.
As at end-December 2013, the share of US dollar in international liabilities rose to 40.5 per cent from 34 per cent as ends.
Non resident Indians are allowed to invest in local bank deposits in foreign currency so that they remained insulated from any adverse currency volatility.
The rise in banks’ international liabilities also contributed by their foreign currency borrowings, RBI said. The central bank allowed banks to borrow up to 100 per cent of their Tier-I capital from overseas markets andswap the dollar with it at a lower rate to attract dollar inflows and arrest the rupee to slip beyond 68.80 a dollar. The offer was valid for three months between September and November last year.
The international assets also recorded substantial growth at 23.4 per cent over the previous year as compared with a decline of 1.4 per cent observed a year ago.
The rise in both liabilities and assets was contributed by increase in exposure towards the USA, UK, UAE, Singapore, Germany and Hong Kong.