Now Reading: RBI exempts FCNR(B), NRE loans from priority sector base
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RBI exempts FCNR(B), NRE loans from priority sector base
The Reserve Bank of India on Friday exempted loans against fresh FCNR(B) and NRE term deposits from adjusted net bank credit (ANBC) calculations for priority sector lending targets. The exemption applies to…
The Story in Brief
The Reserve Bank of India on Friday exempted loans against fresh FCNR(B) and NRE term deposits from adjusted net bank credit (ANBC) calculations for priority sector lending targets. The exemption applies to deposits mobilised between June and September 2026, including renewals. The central bank also scrapped the old base-date method for calculating incremental advances, replacing it with a link to deposits eligible for CRR and SLR exemption.
The move is part of a three-part push to boost foreign currency inflows. Banks raised over $36 billion in FCNR(B) deposits till end-July, with HSBC, SBI and ICICI Bank accounting for half of inflows. RBI governor Sanjay Malhotra said there is no plan to close the scheme before September 30. India's FY27 balance of payments surplus is estimated at $40 billion, up from $25 billion, per IDFC FIRST Bank.
The Indian Opinion
The RBI's PSL relief is a sensible nudge, but the celebration of FCNR(B) inflows should be tempered. These deposits carry a hedging risk that the central bank absorbs, and the 7% yield is attractive only because the rupee is under pressure. The real test is whether the inflows outlast the September window, and whether they stabilise the rupee without creating a fresh dependency. Watch the RBI's swap book for signs of strain, not just the deposit numbers.
Sources (3): bfsi.economictimes.indiatimes.com, livemint.com, timesofindia.indiatimes.com
This story was synthesised by AI from the 3 sources linked above.
Updated: this story now draws on 3 sources.
