Economy · India
Foreign currency deposits boost bank liquidity, lower borrowing costs
Approximately 80% of Foreign Currency Non-Resident (Bank) or FCNR(B) deposit inflows into India were facilitated through leverage, with a significant portion, two-thirds, directed into five-year deposits. This trend is attributed to high interest rates. The influx of these funds has increased the overall liquidity surplus in the banking system to an estimated ₹10 lakh crore. This rise in liquidity is expected to push short-term borrowing costs for banks lower. Some analysis suggests a historical correlation between liquidity and inflation with a time lag.
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- Centre (4): Business Standard, Business Today, The Hindu BusinessLine, The Tribune