Strong response from overseas Indians boosts RBI-backed foreign currency deposit scheme.
Key Highlights
- SBI has mobilised over $1.5 billion through FCNR foreign currency deposits.
- The RBI-backed scheme was launched last month to strengthen India’s forex reserves.
- Banks are offering attractive interest rates with full hedging-cost support from the RBI.
- SBI is expanding outreach to overseas Indians in the Middle East, Singapore and London.
- The initiative comes amid efforts to bolster reserves during global geopolitical uncertainty.
- The scheme resembles the FCNR deposit programme introduced during the 2013 taper tantrum.
News Story
New Delhi: State Bank of India (SBI) has mobilised more than $1.5 billion in foreign currency deposits under the Reserve Bank of India’s (RBI) special Foreign Currency Non-Resident (FCNR) deposit scheme launched last month, according to people familiar with the matter.
The strong response from overseas Indians reflects the attractive returns offered under the RBI-backed initiative, which was introduced to strengthen India’s foreign exchange reserves amid global geopolitical uncertainty.
Under the scheme, the RBI is providing full hedging-cost support to banks raising three- to five-year foreign currency deposits, enabling lenders to offer competitive interest rates. SBI currently offers interest rates ranging from 5.25% to 6%, depending on the deposit size and tenure.
According to reports, SBI is also providing leverage facilities that allow eligible depositors to maximise returns by borrowing funds overseas at comparatively lower rates and placing larger deposits in India.
Banks have intensified their outreach to India’s large overseas community by deploying relationship managers across key expatriate markets, including the Middle East, Singapore and London, while expanding marketing efforts to attract more foreign currency deposits.
Market analysts believe the initiative could draw a broader range of non-resident Indian (NRI) depositors beyond high-net-worth individuals, helping banks further increase FCNR inflows.
The current programme is similar to the FCNR deposit drive launched in 2013 during the taper tantrum, when India mobilised nearly $34 billion to stabilise the rupee and strengthen foreign exchange reserves.
