16 Sept 2026
The FCNR (B) Gambit: Did the RBI Intervene in the Wrong Crisis?
A few months ago, FIIs were exiting India, the rupee touched 97, and the hundred-mark loomed psychologically. The RBI stepped in - not with ordinary open market operations, but with a full revival of the FCNRB (Foreign Currency Non-Resident B) deposit scheme, last deployed during the 2013 Taper Tantrum.
How the scheme works: An NRI walks into an overseas HDFC or SBI branch, deposits say $100K, takes a leveraged loan (up to 10:1) from that branch, and deposits the resulting ~$1M into an Indian bank. The bank converts to rupees and deploys the liquidity normally. In 3–5 years it repays the NRI in dollars. The RBI backstops all currency risk.
In 2013, there was a genuine run - the Fed's taper signal triggered a specific, identifiable event. FCNR (B) was a well-timed emergency brake. It worked.
In 2026, none of that was true. The rupee's decline was real but not a cliff. Reserves were already substantial. Growth was healthy. The current account was nearly balanced. This was a correction, partly driven by geopolitical overhang from the Middle East - not a run. Yet $136B came in (including $127B directly through FCNRB). The scheme overshot badly.
All those rupees now sit on Indian bank balance sheets. Banks have far more deposits than they can lend out. Surplus liquidity in the banking system jumped above ₹10 trillion.
Prof. Prasanna Tantri (ISB) lays out five options in a Business Standard piece, also drawing on the Viral Acharya, Raghuram Rajan et al. paper "Liquidity Dependence: Why Shrinking Central Bank Balance Sheets is an Uphill Task". We discuss how each option carries a huge risk.
The core argument: The RBI fired a bazooka it only gets to use once. NRI appetite may not be there next time, terms will be worse, and India's sovereign credibility becomes a pricing factor. The rupee was already drifting back toward 97 as this episode was recorded - Saudi Arabia's East-West pipeline had just been struck in multiple places. If the situation escalates further, the RBI has less ammunition and less credibility.
"You only get to scream fire in a crowded building once."
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Apple's new launches - What is with the Indian pricing?!?
The folding phone arrived. $2,000+ in the US, ~₹3 lakh in India, and before the ₹40–50K Apple Care Plus you kinda sorta need (screen replacement: ₹1 lakh+). The hinge is genuinely beautiful engineering, though.
iPhone 17 now starts at ₹1 lakh. A year ago ₹70K felt like value; at a lakh, ehhhh.
What does sound like good value: AirPods at ~₹13–15K with ANC.
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References
* Prasanna Tantri (ISB) — Business Standard op-ed on FCNRB second-order effects. https://www.business-standard.com/opinion/columns/after-the-dollar-deluge-costly-choices-126091001676_1.html (https://www.business-standard.com/opinion/columns/after-the-dollar-deluge-costly-choices-126091001676_1.html)
* Viral Acharya, Rahul Chauhan, Raghuram Rajan, Sascha Steffen —-"Liquidity Dependence: Why Shrinking Central Bank Balance Sheets is an Uphill Task" https://www.kansascityfed.org/documents/9666/JH2022_Acharya.pdf (https://www.kansascityfed.org/documents/9666/JH2022_Acharya.pdf)
* 2013 Taper Tantrum and original FCNRB mobilisation: https://www.moneycontrol.com/news/opinion/a-re-look-at-rbis-extraordinary-steps-in-2013-to-stabilise-the-rupee-8887771.html (https://www.moneycontrol.com/news/opinion/a-re-look-at-rbis-extraordinary-steps-in-2013-to-stabilise-the-rupee-8887771.html)
https://www.investopedia.com/terms/t/taper-tantrum.asp (https://www.investopedia.com/terms/t/taper-tantrum.asp)
