Uday Kotak warns of hefty repayment burden from FCNR(B) deposits

At the BFSI Insight Summit 2026 held at Mumbai's Jio World Convention Centre, Uday Kotak described the FCNR(B) programme as a vital insurance policy that gave India three to five years to shore up its macro-economic and financial footing. He commended the RBI for closing the scheme on August 31, noting that India locked in foreign-currency deposits before a sharp rise in US bond yields, saving an estimated 100 basis points.

Kotak warned that the $130 billion raised, plus interest, will eventually require repayment of about $160-170 billion, demanding strategic preparation. He pointed out that the gap between capital-gains tax (≈14.95%) and interest-income tax (up to 39%) is steering Indian investors toward equity-linked assets, reducing demand for interest-bearing deposits. Additionally, he warned that large gold imports, projected to reach $90 billion in FY 2027, could exacerbate one outlet-account deficit and weigh on the rupee. Kotak concluded with optimism about India's long-term prospects, urging a strategic response to these macro-economic challenges.