Indian banks have raised $32 billion under dollar-inflow schemes, RBI chief tells Hindu Businessline

July 27 (Reuters) – Dollar infusion plans announced by the central bank in June have generated revenues of “close to $32 billion”, central bank governor Sanjay Malhotra told the Hindu Businessline newspaper in an interview published on Monday. He said the inflows would likely boost India’s balance of payments.

Here are some important comments:

• Malhotra said most of the $32 billion raised so far has come from the foreign currency non-resident deposit program.

• Additionally, approximately $7 billion came in as foreign portfolio investments in debt securities following the tax changes.

• I have not seen any evidence that the bulk of FCNR flows are due to rebooking of deposits.

• The reason why dollar inflows are not reflected in rupee liquidity is partly due to the increase in the government’s cash balances.

• There has been no change in RBI’s rupee policy and ‌the central bank is only intervening to prevent excessive volatility.

• It would be logical to think that the rupee is not undervalued.

• ‌The current level of the policy repo rate is in line with the current growth-inflation dynamics.

• Generalized inflation pressures have been moderate so far, but the risk of high food and fuel prices turning into a broad-based inflation environment is real.

(Reporting by Ira Dugal; Editing by Mrigank Dhaniwala)