Swap Window for attracting FCNR (B) Dollar funds - As on Sep 18, 2013

Chapters / List

1. What are the pre-conditions for the FCNR (B) deposits mobilised by a bank for being eligible to be swapped with RBI under the swap window?

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2. What is the nature of swap offered by RBI?

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3. Can the maturing FCNR (B) deposits be renewed and construed as fresh deposits for the purpose of swap?

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4. How will the swap cost of 3.5 per cent be computed?

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5. When can a bank approach RBI for the swap?

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6. How will the tenor of the swap be arrived at?

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7. Is it necessary to pass on the benefit arising out of the swap to the depositor?

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8. In case of premature withdrawal of deposit, is it necessary for the bank to approach RBI for cancellation of the swap?

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9. How would the swap be re-priced once a bank approaches RBI for cancellation of the swap subsequent to premature withdrawal of the underlying FCNR (B) deposits?

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10. Can a bank approach RBI for termination of the swap even if the underlying FCNR (B) deposit(s) has not been prematurely withdrawn?

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11. How will the FCNR (B) deposits mobilised in currencies other than US Dollars be taken into account for the purpose of entering into swap with RBI?

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12. On premature withdrawal, banks will have a US Dollar outflow. Can banks meet these dollar demands using any other available source of foreign currency funding?

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13. Will the banks be required to enter into ISDA agreement with RBI for undertaking swaps?

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14. Can a bank enter into a swap with RBI if the original tenor of the fresh FCNR (B) deposits mobilized is more than three years but at the time of availing of the swap facility with RBI, the residual maturity is less than three years?

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15. The swap with RBI will entail very large risk limit consumption (since it would be an off-market, in-the-money swap for banks). This will impact capital requirements substantially. Are such exposures on RBI exempted from capital adequacy requirements?

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16. Can a bank offer loan abroad to the account holder and can the lending institution mark lien on such deposits?

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