NRI fund inflows to accelerate as PSBs step up outreach, FM Sitharaman urges push
Synopsis
India's public sector banks are reporting accelerating NRI fund inflows under RBI's FCNR(B) and ECB swap schemes — and Finance Minister Sitharaman is pushing them to go harder before the September 2026 deadline. With GIFT City's IBUs now in play and diaspora interest strong across the US, UK, and West Asia, this is a rare convergence of policy incentives and global diaspora sentiment.
Key Takeaways
Finance Minister Nirmala Sitharaman met PSB chiefs on 13 July 2026 to review NRI fund mobilisation progress.
Banks reported strong NRI interest in FCNR(B) deposits , ECBs , and OFCBs , with inflows on an accelerating trend.
The interest rate ceiling on fresh FCNR(B) deposits has been suspended, enabling banks to offer more attractive returns.
ECB mobilisations are expected to gain stronger traction in Q3 FY2026 (October–December 2026) .
FCNR(B) deposits are eligible under the scheme until 30 September 2026 ; ECBs and OFCBs until 31 December 2026 .
GIFT City IBUs are being leveraged to attract NRI funds from the UK, US, West Asia, Singapore, Hong Kong, and Southeast Asia.
Finance Minister Nirmala Sitharaman on Monday, 13 July met the chiefs of public sector banks (PSBs) and financial institutions in New Delhi, where bank heads reported a strong response from non-resident Indians (NRIs) to higher interest rates and incentives across Foreign Currency Non-Resident Bank (FCNR-B) deposits, External Commercial Borrowings (ECBs), and Overseas Foreign Currency Borrowings (OFCBs) swap schemes. Banks expressed confidence that NRI fund inflows would gather further momentum as outreach to the Indian diaspora intensifies.
What the Banks Told the Finance Minister
Managing directors and CEOs of PSBs informed Sitharaman that FCNR(B) deposit mobilisation has shown a clear accelerating trend, underpinned by attractive returns — including on five-year deposits — made possible by the suspension of the interest rate ceiling on fresh FCNR(B) deposits. The bank chiefs noted significant interest from NRIs based in Singapore, Hong Kong, West Asia, the United Kingdom, the United States, and other jurisdictions.
They also outlined plans to capitalise on the positive sentiment and expressed confidence that ECB mobilisations would gather stronger traction during the third quarter of the current financial year (October–December 2026).
Sitharaman's Directives to Banks
The Finance Minister called upon banks to further intensify outreach to the NRI diaspora, introduce innovative deposit products, and sustain mobilisation momentum through the remaining period of the schemes. She also urged banks to maximise utilisation of the financial services and institutional infrastructure at GIFT City, Gujarat.
PSBs confirmed they have deployed customised outreach strategies — including digital channels — to engage with the diaspora. International Banking Units (IBUs) at the International Financial Services Centre (IFSC), GIFT City are being actively leveraged to attract funds from multiple jurisdictions including the UK, the US, West Asia, Hong Kong, Singapore, and Southeast Asia.
RBI's Role and Monitoring Framework
During the meeting, the RBI Deputy Governor assured participants that the central bank is actively supporting banks and financial institutions in mobilising deposits and facilitating eligible borrowings. A robust daily reporting framework instituted by the Reserve Bank of India (RBI) has enabled transparent, real-time monitoring of progress across all participating institutions.
Notably, the broad-based participation of public sector banks, private sector banks, and public financial institutions underscores the effectiveness of the swap facilities in reinforcing India's foreign exchange reserves and strengthening the resilience of the external sector amid global uncertainty.
Scheme Details and Deadlines
The schemes were announced by the RBI Governor in the Monetary Policy Statement of 5 June 2026. They comprise a US Dollar–Rupee forex swap facility at par for fresh FCNR(B) deposits and a concessional swap facility for eligible ECBs and OFCBs, aimed at attracting foreign capital, strengthening the balance of payments, and incentivising capital inflows.
FCNR(B) deposits are eligible under the scheme until 30 September 2026, while ECBs and OFCBs are eligible until 31 December 2026. With the scheme window narrowing, the pressure on banks to accelerate mobilisation in the coming weeks is significant.
Point of View
Leaving a narrow window. The suspension of the interest rate ceiling is a meaningful structural concession, yet it also signals that market rates alone were insufficient to draw the volumes needed. If banks rely primarily on top-down outreach rather than product innovation — which Sitharaman explicitly flagged — the post-scheme trajectory of inflows could disappoint.
NationPress
13 Jul 2026
Frequently Asked Questions
What are the FCNR(B) and ECB swap schemes announced by the RBI?
The schemes, announced in the RBI's Monetary Policy Statement of 5 June 2026, include a US Dollar–Rupee forex swap facility at par for fresh FCNR(B) deposits and a concessional swap facility for eligible ECBs and OFCBs. They are designed to attract foreign capital, strengthen India's balance of payments, and boost foreign exchange reserves.
When do the NRI deposit schemes close?
FCNR(B) deposits are eligible under the scheme until 30 September 2026, while ECBs and OFCBs remain eligible until 31 December 2026. Banks are racing to maximise mobilisation before these deadlines.
Which countries are NRI investors coming from?
Bank chiefs reported significant interest from NRIs in Singapore, Hong Kong, West Asia, the United Kingdom, the United States, and other overseas jurisdictions. GIFT City's International Banking Units are being used to channel funds from these regions.
What did Finance Minister Sitharaman ask banks to do?
Sitharaman urged PSBs to intensify outreach to the NRI diaspora, develop innovative deposit products, and sustain mobilisation momentum through the remaining scheme period. She also called on banks to maximise use of GIFT City's financial infrastructure.
What role is the RBI playing in this NRI fund mobilisation drive?
The RBI Deputy Governor confirmed that the central bank is actively supporting banks and financial institutions in mobilising deposits and facilitating eligible borrowings. The RBI has also instituted a daily reporting framework to enable real-time, transparent monitoring of progress across all participating institutions.
