Outstanding FCNR(B) deposits stood at $33.8 billion at the end of March 2026, compared with $32.8 billion a year earlier.
June 9, 2026 21:36 IST
The banking sector expects to attract around $40–50 billion through Foreign Currency Non-Resident (Bank) [FCNR(B)] deposits after the Reserve Bank of India’s measures announced last week to boost foreign currency inflows.
According to an SBI Research Ecowrap report, fresh FCNR(B) inflows could reach $40–45 billion under the scheme. “In 2013, when the RBI introduced the FCNR(B) facility, fresh inflows of $24.5 billion were mobilised within three months. This time, the facility window is open for four months, and we believe fresh FCNR(B) deposits could amount to $40–45 billion,” the report said.
Outstanding FCNR(B) deposits stood at $33.8 billion at the end of March 2026, compared with $32.8 billion a year earlier.
“Banks with a larger overseas presence, such as Bank of Baroda, SBI and HDFC Bank, are naturally better positioned to benefit as they have stronger access to the NRI customer base,” a senior public sector bank official said.
According to reports, Punjab National Bank is targeting $2.5–3 billion in FCNR(B) deposits, while Canara Bank expects to mobilise $105–210 million through the route.
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A senior executive at a large private sector bank said lenders are grappling with a shortage of retail deposits. “These offshore dollar inflows provide a relatively low-cost funding source, so banks are likely to pursue them aggressively. The country benefits through higher foreign exchange inflows, while banks gain an additional avenue to support credit growth. This instrument addresses both objectives,” the executive said.
According to Vishal Lohia, Partner at Dhruva Advisors, the RBI’s move comes after a sharp decline in FCNR(B) inflows, which fell from more than $7 billion in FY25 to just $946 million in FY26.
“Forward cover hedging costs have traditionally been the biggest margin deterrent for banks raising foreign currency liabilities. By removing this burden, the RBI has created room for banks to pass on the savings to depositors. We could see banks offering higher FCNR(B) rates, particularly for longer tenors, to attract dollar deposits more aggressively,” Lohia said.
On Monday, the RBI announced a swap facility for FCNR(B) deposits available exclusively to Authorised Dealer Category-I banks for deposits with maturities ranging from three to five years. Banks will be free to determine deposit rates in line with their internal policies.
The RBI has also exempted these deposits from statutory liquidity ratio (SLR) and cash reserve ratio (CRR) requirements. The facility takes immediate effect and will remain available until October 16 for deposits mobilised up to September 30.
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