Mumbai: In a fresh incentive for banks to attract foreign currency deposits from overseas Indians, the Reserve Bank of India (RBI) on Friday exempted rupee loans against fresh and renewed foreign currency non-resident (FCNR-B) deposits of three to five years mobilized between 8 June and 30 September from their adjusted net bank credit (ANBC) calculations.<\/p>\n
Adjusted net bank credit is net credit plus investments made by banks in certain bonds, and is used as a base for priority sector lending targets. This implies they are free to use these funds for loans without setting anything aside for the mandated priority sector targets.<\/p>\n
Loans against non-resident external (NRE) term deposits, maintained in rupees by non-resident Indians (NRIs) earning in foreign currencies, of three years or more mobilized by the banks between 19 June and 30 September will also be exempt from the ANBC calculation, the central bank said.<\/p>\n
RBI said it has provided exemption from maintenance of cash reserve ratio (CRR) and statutory liquidity ratio (SLR) on fresh FCNR deposits of minimum tenor of three years and a maximum of five years, mobilized between 8 June and 30 September, and on fresh NRE term deposits.<\/p>\n
The new FCNR accounts scheme allows NRIs to make leveraged and unlevered deposits at Indian banks in foreign currency, with RBI taking the hedging risk to offer the potential for high returns. The scheme, announced on 5 June and rolled out three days later, will run till the end of September.<\/p>\n
HSBC, State Bank of India (SBI) and ICICI Bank garnered half of all inflows under the deposit incentive scheme to attract dollars and strengthen the rupee, official data showed.<\/p>\n
Despite strong inflows, RBI has no immediate plans to end the FCNR(B) scheme before the 30 September deadline, governor Sanjay Malhotra said on Wednesday.<\/p>\n
\u201cWe 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. We will keep you posted on this,\u201d Malhotra said at the post-policy press conference.<\/p>\n
During the monetary policy announcement, he also said the country\u2019s balance of payments (BoP) would see a healthy surplus in the current financial year.<\/p>\n
India\u2019s BoP surplus in FY27 is estimated at $40 billion, scaled up from the earlier estimate of $25 billion. The current account deficit (CAD) is estimated at 1.7% of GDP, according to a report by IDFC FIRST Bank dated 3 August.<\/p>\n
Shayan leads the coverage for banking and finance in Mint. Based in Mumbai, he has spent 15 years as a journalist, joining the Mint team in 2018. Over the years, he has tracked the Reserve Bank of India (RBI), commercial banks, and the complex world of shadow banking.<br><br>His expertise goes beyond just reporting news, and he specializes in explaining the "why" behind India\u2019s financial shifts. Shayan has covered major milestones in the industry, including the rollout of the Insolvency and Bankruptcy Code (IBC), mergers in the banking and non-banking space, and the many challenges facing the country's credit markets. He has tracked cases of wrongdoings at India\u2019s private sector banks and murky boardroom battles, trying to get behind the scenes.<br><br>Shayan is driven by a commitment to accuracy and clear, honest reporting. He believes in making finance easy to understand, ensuring his readers and investors stay informed about the forces shaping their money. When not at work, he tries to hone his amateurish photography skills, read fiction, and listen to music. You can follow his work and updates on LinkedIn and Twitter\/X.<\/p>\n
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