Depositors await clarity on leverage
MUMBAI: Reserve Bank of India ’s sweeping overhaul of FCNR(B) deposit rules has triggered intense interest among non-resident investors , but a lack of clarity on leveraged structures has left banks and high-net-worth individuals in a wait-and-watch mode even as flyers on social media promise 13.83% return to NRIs.
The maths behind the 13.83% projection is that the depositor will get up to 6% return on deposits while they can use their initial deposits as a security and borrow money at 5.4%. Factoring in the costs of availing a loan, the depositor can repeat the process nine times (i.e depositing $1 million and borrowing up to $9 million)
SBI, did not respond to query on comments on Sunday. RBI is yet to come out with a FAQ (frequently asked questions) on the scheme although it has asked banks to provide details of daily collections. The concern among some bankers is that with West Asia ceasefire being announced and big ticket ECBs from PSUs on the cards, there may not be a need to go overboard with deposit mobilisations.
The maths behind the 13.83% projection is that the depositor will get up to 6% return on deposits while they can use their initial deposits as a security and borrow money at 5.4%. Factoring in the costs of availing a loan, the depositor can repeat the process nine times (i.e depositing $1 million and borrowing up to $9 million)
SBI, did not respond to query on comments on Sunday. RBI is yet to come out with a FAQ (frequently asked questions) on the scheme although it has asked banks to provide details of daily collections. The concern among some bankers is that with West Asia ceasefire being announced and big ticket ECBs from PSUs on the cards, there may not be a need to go overboard with deposit mobilisations.
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