India has hit on a not-so-novel idea to shield an economy made vulnerable by high international oil prices. The government has got State Bank of India, the country's largest bank, to sell Five-year foreign currency deposits to expatriate Indians to help tackle a worsening balance of payments situation.
| Indian taxpayers: footing the bill for a costly way to cut trade deficit | ||||||
SBI, whose largest owner is the Indian central bank, is expected to collect between $2 billion and $4 billion from the sale of India Millennium Deposits (IMD). Just before the deposits went on sale, SBI Chairman GG Vaidya said his bank had commitments worth $5 billion for IMD.
India's oil import bill is expected to double to about $18 billion this year. A widening trade deficit and a sell-off by foreign portfolio investors put the balance of payments in the red by about $1 billion in the quarter ended June, as compared with a surplus of $3.32