$ 17.4 Billion Raised Through FCNR (B) Deposits So Far Says RBI

Mumbai: India has mobilised $17.4 billion through fresh Foreign Currency Non-Resident (Bank), or FCNR(B), deposits under the Reserve Bank of India’s concessional swap facility, data released by the central bank on Monday showed.

The RBI said that the swap facility has seen avid interest and attracted steady forex inflows since June 8, 2026. FCNR(B) deposits under the facility stood at $17.4 billion as of July 17 while Overseas Foreign Currency Borrowings (OFCB) contributed another $1.97 billion, External Commercial Borrowings (ECB) brought in $1.34 billion. As a result, the total overall foreign currency inflows mobilised through the three routes reached $20.7 billion.

With a view to strengthen balance of payments and incentivising capital inflows, the RBI had announced a series of measures including a facility for offering concessional swaps for fresh FCNR(B) deposits, OFCB and ECB inflows, on June 5, 2026. This facility was operationalized on June 8, 2026, and is available upto September 30, 2026, for the FCNR(B) deposits and upto December 31, 2026, for the OFCBs and ECBs. NRIs can earn 17-27 per cent return annually over three to five years under FCNR B deposits.

As opposed to public sector bank chiefs, heads of private banks said that deposit inflows through FCNR schemes are likely to fall short of lofty market expectations. At the Q1FY27 earnings call, HDFC Bank managing director and chief executive officer Sashidhar Jagdishan said that potential inflows under the scheme may be lower than initially expected because tax rules make the borrowing to invest option unattractive for many overseas Indians outside West Asia and Singapore.

"When the scheme was launched, the impact of taxation for NRIs was not fully assessed. Subsequently, we've realised that jurisdictions outside the Middle East and Singapore do not make economic sense because taxation is on a gross interest basis." Jagdishan said.

He said that many overseas citizens of India, Non Resident India in Europe, the US and Australia are therefore unlikely to use the window.

He is now forecasting inflows closer to the $50-55 billion mark compared to the initial estimate of $60-80 billion of potential inflows. He also said liquidity constraints in West Asia, where geopolitical tensions have prompted central banks in countries such as the UAE and Oman to discourage or cap leverage and require banks to maintain higher liquidity buffers, have reduced the amount banks can raise.

HDFC Bank also faces constraints because of an embargo imposed by the UAE regulator on onboarding new customers.

However public sector bank chiefs during the first quarter earnings last week, expressed confidence that FCNR-B deposit mobilisation will gather pace before the RBI's September 30 deadline despite a slow start. Lenders are strengthening overseas partnerships and outreach to NRIs

Among public sector lenders, Punjab National Bank has mobilised $ 425 million against its target of $ 2.5 billion, Union Bank of India has garnered $ 106 million against the targeted $ 2 billion, Indian Bank has collected $ 140 million against its $ 2 billion goal, while Central Bank of India has mobilised $ 8.8 million against a target of $ 400 million.Private lender RBL Bank said that it has mobilised $ 150 million so far while Canara Bank has received $ 80 million.

Under the mechanism, banks can swap eligible foreign currency funds with the RBI on concessional terms, reducing the cost and exchange-rate risk associated with bringing overseas funds into the country.