Furthermore, we had to ensure that the borrowing had an appropriate medium-term maturity, say five years. RIBs, which are essentially in the nature of foreign currency deposits on a par with FCNR-B, were devised in the light of these considerations. It was also necessary for the RBI to ensure that these funds did not disrupt the money, forex or government securities market.
There have been three main points of criticism regarding RIBs, i.e. cost of raising RIBs, substitution of FCNR-B deposits and exchange rate guarantee. A total amount of $ 4.23 billion has been mobilised at a moderate cost in the face of a difficult international environment and the recent downgrading of our credit rating. Some have called it the deal of the year.