Foreign currency non-resident bank (FCNR-B) deposits mobilised by banks under the special Reserve Bank of India (RBI) window stood at $132.9 billion according to inflows reported by banks as of September 18, up from the previous update of $127 billion.

Overall inflows amounted to $143.5 billion, inclusive of external commercial borrowings (ECBs) and overseas foreign currency borrowings (OFCBs), according to data released by the RBI on Monday.

This is more than five times the $26 billion raised under a similar scheme in 2013.

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Banks managed to mobilise more money in the last 10 days of the scheme than they did in the first 74 days, when they collected $65.4 billion.

"We expect the total inflows to go up to $160 billion by the end of December because the RBI is still providing the hedging facility," said Gaura Sengupta, chief economist at IDFC First Bank.

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Eye on Global Bond Yields

"Therefore, PSUs (public sector undertakings), for whom the scheme is largely intended, may go ahead and borrow despite high global rates if they have targets," Sengupta added.

The facility, operationalised on June 8 to boost dollar inflows and strengthen foreign exchange reserves, allowed banks to swap eligible overseas borrowings with the central bank at concessional rates, lowering their cost of funds.

But with global bond yields rising lately, some might think twice about borrowing from overseas.

"From the time the scheme was announced to now, borrowing via the ECB route is less lucrative despite RBI bearing the hedging cost. Additionally, we don't need the inflows anymore because a large chunk has already come in," said Madhavi Arora, chief economist at Emkay Global Financial Services. The swap scheme for ECBs and OFCBs will continue until December 31, as planned.

"There have been talks about ending the scheme earlier for ECBs and OFCBs too because right now, global rates are high and any dollar that comes into the country is an additional liability," an executive from a private bank said on condition of anonymity.

Experts, however, said that rather than formally ending the scheme, the RBI might deter banks and state-run firms from raising offshore capital via ECBs and OFCBs, while continuing to support FCNR (B) deposits.