RBI Boosts Bank Incentives for NRI Foreign Currency Deposits

Loans against non-resident external (NRE) term deposits, maintained in rupees by NRIs earning in foreign currencies, of three years or more mobilized between 19 June and 30 September will also be exempt from ANBC calculations. The central bank also said it has exempted fresh FCNR deposits of minimum three years and maximum five years, and fresh NRE term deposits, from maintenance of cash reserve ratio (CRR) and statutory liquidity ratio (SLR).

The FCNR-B scheme, announced on 5 June and rolled out three days later, allows NRIs to make deposits in foreign currency at Indian banks, with RBI taking the hedging risk to offer potential for high returns. The scheme will run till the end of September. HSBC, State Bank of India (SBI) and ICICI Bank accounted for half of all inflows under the scheme, official data showed.

Despite strong inflows, RBI governor Sanjay Malhotra said on Wednesday there are no immediate plans to close the scheme before the deadline. "We have got robust flows as you have mentioned, and we do hope to get good healthy flows going forward. But as of now, there is no proposal under consideration to close the scheme prematurely," he said at a post-policy press conference.

Malhotra also said the country's balance of payments (BoP) would see a healthy surplus in the current financial year. India's BoP surplus in FY27 is estimated at $40 billion, up from an earlier estimate of $25 billion, and the current account deficit (CAD) is estimated at 1.7% of GDP, according to a report by IDFC FIRST Bank dated 3 August.