With reference to the FCNR(B) scheme and repayment obligations, consider the following statements: 1. The total amount mobilized through the FCNR(B) scheme is projected to be $170 billion. 2. The RBI and government mobilized over $130 billion through the FCNR(B) scheme. 3. The projected repayment obligation is estimated to be between $160 billion and $170 billion. Which of the statements given above is/are correct?

Kotak warns India to strengthen fundamentals as US assets beat domestic bonds

GS3Economy · S&T · Environment · Security· Monetary policy, RBI & banking· Mains· 27 October 2026

Capital flight and yield differentials: a GS3 case study on managing external debt and domestic bond competitiveness.

Why in news

Uday Kotak warned at the Business Standard BFSI Summit that India must strengthen macroeconomic fundamentals as US assets are increasingly outperforming domestic bonds.

Background

The RBI and government mobilized over $130 billion through the FCNR(B) scheme. There is a projected repayment obligation of $160 billion to $170 billion before the August 31 closure.

Facts for Prelims

FactFCNR(B) scheme: Mobilized over $130 billion by RBI and government.
FactRepayment obligation: Estimated between $160 billion and $170 billion.
FactTimeline: Strategic preparation required before the August 31 closure.

Prelims practice question

With reference to the FCNR(B) scheme and repayment obligations, consider the following statements:

The total amount mobilized through the FCNR(B) scheme is projected to be $170 billion.
The RBI and government mobilized over $130 billion through the FCNR(B) scheme.
The projected repayment obligation is estimated to be between $160 billion and $170 billion.

Which of the statements given above is/are correct?

(a)1 only
(b)2 only
(c)3 only
(d)2 and 3 only

Show answer

Answer: (d) 2 and 3 only — Statements 2 and 3 are correct. Statement 1 is incorrect: The mobilized amount is over $130 billion, while $170 billion is the upper limit of the repayment obligation.

For Mains

Q. Discuss the challenges India faces in maintaining capital inflows and managing external debt obligations amidst the rising attractiveness of US assets over domestic bonds.

Dimensions to cover in your answer

Capital flight risk: Competition from high-yielding US assets potentially draining domestic liquidity
Macroeconomic stability: Need for structural reforms to improve domestic bond yields and investor confidence
Debt management: Balancing immediate repayment obligations of $160B-$170B with long-term fiscal sustainability

Keywords: Macroeconomic fundamentals · Capital flight · FCNR(B) scheme · External debt · Monetary policy · Yield differential

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