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Informist, Monday, Jul. 13, 2026

 

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--Fin min: Told PSU bks to up outreach for FCNR deposits to sustain progress 
--Fin min: RBI supporting bks, NBFCs in mobilising FCNR deposits, foreign fund 
--Fin min: PSU bks' FCNR deposit mobilisation show clear accelerating trend 
--Fin min: PSU bks see good interest from West Asia NRIs for FCNR scheme 
--Fin min: PSU bks see good interest from Hong Kong, UK NRIs for FCNR scheme 
--Fin min: PSU bks see good interest from Singapore, US NRIs for FCNR scheme 
--Fin min: PSU banks to show stronger overseas borrowing in Q3 
--Fin min: PSU bks report strong interest in RBI's FCNR(B), ECB swap scheme 
 

 

NEW DELHI – Public sector banks and financial institutions have received "an encouraging response from the Indian diaspora", with healthy interest in the Reserve Bank of India's swap facility to raise fresh foreign currency non-resident (bank) deposits and its concessional dollar-rupee forex swap facility for external commercial borrowings for public sector undertakings, according to the finance ministry. Finance Minister Nirmala Sitharaman has asked public sector banks to intensify outreach programmes to sustain the momentum in inflows under these schemes, the ministry said. 

 

Sitharaman met top officials from PSU banks and financial institutions on Monday to review the progress under the RBI's two measures announced last month to boost foreign capital inflows. "During the interaction, the Union Finance Minister appreciated the encouraging and enthusiastic initial response and called upon banks to further intensify outreach to the NRI diaspora, introduce innovative deposit products and sustain the momentum of mobilisation during the remaining period of the schemes," the ministry said in a release. 

 

In June, the RBI and the government announced a slew of measures to attract foreign capital as the rupee came under pressure from a surge in crude oil prices and strong foreign capital outflows following the outbreak of war in West Asia at the end of February. On Jun. 5, RBI Governor Sanjay Malhotra announced a concessional foreign exchange swap facility until Dec. 31 to incentivise external commercial borrowings by public sector undertakings. He also introduced a facility under which the RBI will bear the full hedging costs for banks raising fresh three- to five-year foreign-currency non-resident (bank) deposits until Sept. 30.

 

This mechanism was last deployed in 2013, when then-RBI governor Raghuram Rajan announced an FCNR deposit window to attract inflows. The scheme, under which the RBI had swapped dollars raised by banks via FCNR deposits at concessional rates, successfully mobilised about $26 billion, helping stem the rupee's fall, which was then reeling under the 'Taper Tantrum'.

 

During Jan-May, foreign portfolio investors pulled out $24.67 billion from Indian markets, more than triple the $7.6 billion withdrawn in the corresponding period last year. Inflows improved following the government's move and totalled $2.69 billion in June, up from $2.38 billion in June last year. The rupee, which had also depreciated to a record low of 96.96 in May, has since then recovered slightly to 95.62 on Monday.

 

"The sustained and broad-based participation of public sector banks, private sector banks and public financial institutions underscores the effectiveness of the swap facilities in mobilising foreign currency inflows, reinforcing India's foreign exchange reserves and strengthening the resilience of the external sector amid global uncertainty," the ministry said. 

 

According to the release, the heads of PSU banks said that there has been significant interest in FCNR(B) deposits from non-resident Indians residing in Singapore, Hong Kong, West Asia, the UK, the US and other overseas jurisdictions. "The MDs (managing directors) and CEOs (chief executive officers) outlined their plans to capitalise on the positive sentiment and accelerate deposit mobilisation during the remainder of the scheme period," the release said. 

 

Since the RBI rolled out the concessional swap facility to bring the cost of raising dollar deposits in line with that of rupee deposits, several banks have raised interest rates on FCNR dollar-denominated bank deposits for tenures ranging from three to five years. Ujjivan Small Finance Bank offered the highest rate among banks at 7.50% on three- to five-year deposits, as per data compiled by Informist.

 

During the interaction, the banks informed that the International Banking Units at the International Financial Services Centre – GIFT City are being utilised to leverage fund mobilisation from multiple jurisdictions, including the UK, the US, West Asia, Hong Kong, Singapore and Southeast Asia. Sitharaman told the banks to maximise utilisation of financial services and institutional infrastructure available at the GIFT City.

 

State-owned financial institutions also said that the momentum in mobilising offshore borrowing under the concessional dollar-rupee forex swap facility will gain traction in Oct-Dec. 

 

The meeting was attended by Department of Financial Services Secretary Sanjay Lohia, Economic Affairs Secretary Anuradha Thakur, Revenue Secretary Arvind Shrivastava, Chief Economic Adviser to the finance ministry V. Anantha Nageswaran, RBI Deputy Governor Rohit Jain and heads of all PSU banks and financial institutions, including State Bank of India Chairman C.S. Setty. 

 

During the discussion, Deputy Governor Jain assured that the central bank is actively supporting banks and financial institutions in mobilising deposits and facilitating eligible borrowings. "It was also noted that the robust daily reporting framework instituted by the RBI has enabled transparent, real-time monitoring of progress across participating institutions," the ministry said.   End

 

US$1 = INR 95.62

 

Reported by Priyasmita Dutta

Edited by Saji George Titus

 

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