Close to 80% of the $127.2 billion raised through the special Foreign Currency Non-Resident (Bank) deposit scheme came through a loan-based route, bankers estimated.
Under these arrangements, non-resident Indians put money into FCNR(B) deposits and borrowed additional funds against them, which could then be placed in more FCNR(B) deposits.
Financial commentator Manoj Arora pointed to the large returns the NRIs could make through this arrangement. He said the NRIs could earn nearly 7% on US dollar deposits while using money borrowed from Indian banks.
Around 80% of FCNR flows came because banks gave loans to NRIs with the condition that they would invest in FCNR.
— Manoj Arora (@manoj_216) September 6, 2026
Wow!
Close to 7% returns on USD and that too using Indian banks' money.
NRIs are having windfall gains.
And if INR underperforms compared to USD, resident Indians… pic.twitter.com/B0T7SpCS5L
ALSO READ: Which Banks Win From The FCNR-B Boom: ICICI, SBI, HDFC Bank All Post Strong Hauls
The arrangement allowed NRIs to increase their returns by borrowing money against their initial FCNR(B) deposits and putting the borrowed money into more deposits.
Arora argued that if the rupee falls against the US dollar, the impact of these dollar-linked loans could eventually fall on the Indian economy, while NRIs benefit from the higher returns.
ALSO READ: FCNR Deposits Beat Estimates, RBI To Pull Out Rs 6-7 Lakh Crore: Pranjul Bhandari
"Close to 7% returns on the US dollar and that too using Indian banks' money. NRIs are having windfall gains. And if the rupee underperforms compared to US dollar, resident Indians will fund the non resident Indians," Arora said.
More than two-thirds of the deposits were for five years. Most of the money came from non-US markets, including West Asia, Europe and parts of Africa, bankers said.
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