Wiztango

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@NamrataChainani @canarabank Not surprised. There are tons of leveraged FCNR applications pending at their GIFT City branch. Execution is a big issue.

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@JaspalSingh707 @RBIsays @RBI @ICICIBank_Care What is the your complaint? How can a bank manipulate published rates?

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@ActusDei @IDFCFIRSTBank @thefynprint And this is how IDFC has designed its own leveraged product. 7.12% as the loan cost and 6.75% on the asset side

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@VipinSehgal_in @ActusDei @IDFCFIRSTBank @thefynprint Margin calls for what? The loan is a fixed rate loan. The lending rate and the calculation methodology is mentioned in the loan facility agreement.

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@shraddhs Because the bank is offering a loan which needs to be assessed on a standalone basis notwithstanding the underlying collateral. Foreign banks are more rigorous. They do a detailed profiling exercise to ensure you do not put more than x% of your networth into the scheme.

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@_RituSingh This is going to be super positive for foreign banks. HSBC will make a ton of money deploying these deposits. I get a feeling this is being done to make it more attractive for foreign banks so that they can pull in more $ given their global network and balance sheet strength

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@piyush58161132 @MVachhrajani Unless you are a RNOR at maturity your total net income on the leveraged FCNR gets taxed, so your returns drop materially.

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@macromaniacc @Iamsamirarora The problem is not participation but ability of the banks to secure $ funding. There is a reason HSBC managed to mobilise 6B+ - their strong parent balance sheet and ability to secure $ funding. Speak to the NRI Cell of a PSU bank to get insights on the robust demand side.

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@InvestSlowly @PositiveGamma @Karthik287

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@InvestSlowly @PositiveGamma @Karthik287 As of now it is the PSU banks, specifically Central Bank, followed by Canara, PNB and BOB. But their execution is patchy. If you are new client it may take a minimum of 2 weeks to execute the transaction by which time the funding costs may go north.

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@PositiveGamma @Karthik287 They dont have $ liquidity. Also only offering in the 3Y buckets. Spreads worse than PSU banks. Funding costs have gone up. Crappy one sided documentation.

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@prithviram Which one says demand loan? Which bank?

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@RohanCornelio @ActusDei Not heard of UBI offering the leveraged version. 6.6 is for the vanilla deposit. USD funding and documentation is a major challenge for the PSUs. All of them have come out with brochures but only a few have the ability to execute.

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@equities_samjho Deployment. Yes. The other bigger challenge is $ funding.

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@sahibkataria @ActusDei If you are an existing client it becomes easier. They have $ funding constraints. I've heard their next large tranche is likely to be executed around end of this month.

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@nilesh_hkg @deepakshenoy @ChitraRatha You repay the loan at maturity which is netted off against the deposit. The bank can only call on the loan in the case of defined EODs. Though non recourse a bank default or a regulatory freeze is an extreme tail risk scenario. Would you expect SBI or HSBC to default in 3 or 5Y?

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@sagarkamat @ActusDei @deepakshenoy Cheap foreign currency funding. Raising 50B in the offshore bond market in a span of 3 months would be practically impossible for Indian banks. Banks make $$ at every step. Leverage, hedge, and the deployment.

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@VineetSG_ @ActusDei You need to maintain a 50L AQB. NRIs would either do a term deposit or invest into a mutual fund. Assuming one places a term deposit the return/XIRR drops to around 13%. The structure is not bullet and pays out every six months, so you get to reinvest the payout.

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@RaajHanda @ActusDei Its netted off. There are two structures. Net payout every six months or bullet on maturity.

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@RohanCornelio @ActusDei Push from the FinMin. Rupee is back at 96. FCNR mobilisation is not as expected. Wont be surprised if SBI hikes its FCNR deposit rate to 6.25 in the coming weeks.