The proceeds of the loan can be placed as a fresh FCNR(B) deposit at a higher interest rate that banks are currently offering for a limited period
| Photo Credit:
VIJAY SONEJI

Specialized foreign-currency banking branches operating in GIFT City have leveraged FCNR (foreign currency non-resident bank) B Deposits by disbursing $52 billion as loan between July 15 and August 31, said official sources.

“The update received from IBUs (IFSC Banking Unit) as on August 31 showed the total amount disbursed under the scheme is around $52.82 billion against sanctioned loan of $54.02 billion as on August 31, 2026,” a source said. Further ECB (external commercial borrowing) disbursed by IBUs totalled to $11.62 billion during the period from April to August.

According to RBI data, the inflows through the special foreign currency non-resident bank (FCNR-B) deposit have crossed the century mark, according to the Reserve Bank of India (RBI), with $127.2 billion coming through the special concessional swap window. This has further boosted leverage option. Bank’s leverage option, allowing investors to borrow up to nine times their deposit. By reinvesting borrowed funds, the bank projects significantly higher annualised yields even after accounting for loan costs.

This means bank’s overseas branches as well its overseas subsidiaries’ branches can give a loan of $9 million on a fresh deposit of $1 million. The proceeds of the loan can be placed as a fresh FCNR(B) deposit at a higher interest rate that banks are currently offering for a limited period. All these mean banks can give more than $110 billion. Banks’ overseas branches as well their overseas subsidiaries branches can extend loans to NRIs based on the strength of their existing/ new FCNR(B) deposits in India.

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