The rush to capitalise on the Reserve Bank of India’s FCNR(B) deposit scheme is already pushing up borrowing costs, with leveraged loan rates rising 20-25 basis points as banks compete intensely for a window that bankers estimate could generate substantial foreign currency inflows. The rate pressure is emerging faster than many expected. Floating rate loans against FCNR(B) deposits are currently available at 4.90-5.25%, but once converted into fixed-rate instruments for three or five years, the cost climbs to 5.25-5.50% after accounting for the term premium. “Loans are now available at floating rates of 4.90-5.25% for depositors. Once these are converted into fixed-rate loans for three or five years, the cost rises to 5.25-5.50% after adding the term premium,” said a senior public sector bank executive who has received preliminary quotes from foreign banks.