India's Finance Minister Nirmala Sitharaman has asked banks to intensify outreach to non-resident Indians (NRIs), introduce innovative deposit products, and sustain the momentum of mobilization under the Reserve Bank of India's (RBI’s) swap initiatives.
According to an official press statement, these initiatives cover foreign currency non-resident (bank) [FCNR(B)] deposits, external commercial borrowings (ECBs), and overseas foreign currency borrowings (OFCBs).
FCNR(B) deposits are fixed-term deposits maintained by NRIs, persons of Indian origin, and overseas citizens of India in designated foreign currencies such as the US dollar, pound sterling, euro, Japanese yen, Canadian dollar and Australian dollar. The deposits remain denominated in the foreign currency, insulating depositors from exchange-rate fluctuations. Both the principal and interest are freely repatriable.
OFCBs refer to foreign currency borrowings raised by Indian banks from overseas, while ECBs are foreign currency loans raised by eligible Indian companies and institutions from international lenders for permitted end-uses, including infrastructure and capacity expansion.
Bank chiefs said lenders are offering attractive returns on FCNR(B) deposits—including five-year tenures—thanks to the suspended interest rate ceiling on new deposits under the scheme. They added that interest has been strong among NRIs living in Singapore, Hong Kong, West Asia, the UK, the US, and other overseas jurisdictions.
Public sector banks informed the finance minister that they have put in place customised outreach strategies, including digital channels, to engage with the NRI diaspora and enhance deposit mobilization. They also noted that FCNR(B) deposit mobilization has shown a clear accelerating trend, supported by the attractive returns being offered by banks, according to the official press statement.
