In a first in India, Deutsche Bank has used the Reserve Bank of India's (RBI) window to swap fresh foreign currency non-resident bank (FCNR) (B) dollar funds. The bank raised about $450 million FCNR (B) deposits from about 10 non-resident Indians and swapped it with the central bank.    

Newspaper reports say that the funds were mobilised for three years and priced at 3-3.5 per cent a year. The RBI swap window, recently made available, allowed the bank to convert the dollar funds into rupees at 3.5 per cent.    

Analysts said had it not been for this facility, the swap cost would have been seven or eight per cent, considering the recent rupee-dollar forward rates. The move follows reports that a few foreign banks are providing upfront loans to non-resident Indians (NRIs) for FCNR (B) deposits.    

Market participants say through their offshore branches, foreign banks are offering loans up to 90 per cent of their FCNR (B) deposits to NRIs. Though these loans are priced higher than market rates, NRIs benefit because the interest on FCNR (B) deposits is higher than the payments on these loans.