RBI Governor Raghuram Rajan on Saturday said that he chose the ‘least bad’ option of raising forex through FCNR B) scheme 3 years ago, but it had helped in strengthening the rupee and stabilising the currency market.
When the rupee had plunged to a life-time low in 2013 and was in a free-fall due to the US ‘taper tantrums’, India had mobilised $26 billion through foreign currency non-resident bank account (FCNR-B) deposits by offering a special swap window for banks. The 3-year deposits will mature this month. “Policy making is about deciding in the face of uncertainty, after weighing the alternatives as best as one can. On the day I was to take over, with no good options on the table, I had to choose the least bad one. I decided to go ahead,” he said in a speech to university students here. Soon after taking over as the RBI Governor on September 4, 2013, Rajan announced the FCNR(B) scheme which was considered to be his masterstroke for stabilising the rupee.
Terming it as an ‘iffy scheme’ he said the scheme was a measured risk, with a probability that the RBI would lose money, a certainty that the bankers would make money, but also a reasonable chance that the country would be significantly better off.