Now Reading: RBI exempts new FCNR and NRE advances from priority sector targets
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RBI exempts new FCNR and NRE advances from priority sector targets
The RBI has excluded advances against fresh FCNR (B) and NRE term deposits from the calculation of adjusted net bank credit for priority sector lending targets. Banks can now lend against these…
The RBI has excluded advances against fresh FCNR (B) and NRE term deposits from the calculation of adjusted net bank credit for priority sector lending targets. Banks can now lend against these deposits without those loans counting toward the 40 per cent priority sector requirement. The exemption applies to FCNR (B) deposits of three to five years mobilised between June 8 and September 30, 2026, and NRE term deposits of three years or more raised between June 19 and September 30, 2026.
The move complements earlier RBI circulars that exempted the same deposits from cash reserve ratio and statutory liquidity ratio requirements, and offered a dollar-rupee swap facility. The combined incentives are designed to attract fresh foreign currency inflows. The amendment took immediate effect.
Indian Opinion Analysis
The RBI has opened a limited window to lure dollar deposits by offering three regulatory sweeteners simultaneously: a currency swap that hedges exchange risk, an exemption from maintaining CRR and SLR, and now a waiver from priority-sector lending obligations on loans backed by those deposits. The earlier swap facilities of 2013 and 2022 were similarly aimed at shoring up foreign-currency reserves during periods of rupee pressure, but this is the first time all three incentives have been bundled in one circular. Banks had until 30 September 2026 to mobilise the deposits. The actual inflow will be measured against the RBI's target for overall forex reserves, which stood at roughly $660 crore (Rs 5.5 lakh crore) as of July 2026. The swap window itself closes when the last deposit matures, but the immediate number to watch is the dollar volume banks raise before the September cut-off.
Source: rbi.org.in
This brief was synthesised by AI from the source linked above.
