Non-resident ordinary(NRO) account. A simple bank account with deposits in rupees. It is non repatriable.

tenure. This means that the banks swapped around $27 billion (₹1.67 lakh crore) with the RBI for rupees. Now RBI will have to give back the money in dollars.

The average exchange rate in September-December 2013 was ₹62. At present, the exchange rate is hovering around ₹67. But banks will pay back the amount with an annual interest of 3.5%, which means for the banks the effective exchange rate will be around ₹69 when they pay back the swapped money.

For the banks, this was a decent hedge – with only a minor depreciation – as they would have invested the money exchanged from RBI in high-return assets. On the other hand RBI will not have to bear any currency risk.

In effect, RBI, which has already said it is fully prepared for the redemption of FCNR(B), and its new governor will not face much of a challenge.