Mumbai: Veteran banker Uday Kotak said that the repayment bill for FCNR(B) deposits could rise to $160-$170 billion, compared to $130 billion raised, after accounting for interest costs.
“I have no hesitation in saying that what policymakers in India, between the Reserve Bank of India and the government, did was the right thing in the context of the global macroeconomic and geopolitical situation, where the world faces the Middle East conflict in addition to the Russian-Ukrainian conflict,” Kotak said, speaking at the Business Standard BFSI Summit. “I believe the FCNR(B) scheme is a strong insurance policy.” He also praised the timing of the scheme, which was announced before the significant rise in US bond yields.
According to Kotak, total foreign investment in India, including foreign portfolio investment and foreign direct investment (FDI), amounted to approximately $1.5 trillion. He said that while the Indian investor, on one level, acted as a counterweight to foreign investors, on another level, they were responsible for providing an exit to foreign investors. He explained the rise in domestic investment by referring to the difference between the 15% capital gains tax on equities and the high tax rate on interest income, which could reach 39% for high-net-worth individual investors.
He said that the current account would have had a surplus if not for large gold imports.
