FM asks banks to boost NRI outreach, step up foreign capital mobilization
New Delhi: Union finance minister Nirmala Sitharaman on Monday asked banks to intensify outreach to non-resident Indians (NRIs), introduce innovative deposit products, and sustain the
New Delhi: Union finance minister Nirmala Sitharaman on Monday 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). Sitharaman reviewed the progress of the RBI's swap facility schemes during an interaction with managing directors and chief executive officers of public sector banks and public financial institutions in New Delhi. The meeting was also attended by the secretaries of the departments of financial services, economic affairs, and revenue, the chief economic adviser, the RBI deputy governor, and other senior officials. Mint reported on 10 July that the finance ministry had convened a high-level meeting of chiefs of public sector banks, IDBI Bank and other public financial institutions on 13 July to chalk out a strategy to mobilize foreign capital. Also Read | Govt tells its banks to expand deeper into Rural India According to the finance ministry, managing directors and chief executive officers informed the finance minister that the RBI's swap facility schemes for FCNR(B) deposits, ECBs and OFCBs have received an encouraging response, with healthy interest across all three instruments.
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. NRI outreach 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. The banks outlined plans to capitalise on the positive sentiment and accelerate deposit mobilisation during the remainder of the scheme period. They also expressed confidence that ECB mobilisation would see stronger traction during the third quarter of FY27. 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 mobilisation.
The BriefWire