FM Sitharaman to review PSB foreign currency deposit drive on Monday
Synopsis
Finance Minister Sitharaman is personally reviewing India's FCNR(B) deposit drive on Monday — a signal that the Centre views NRI foreign currency inflows as a strategic priority. With $3–4 billion already mobilised and a $40–50 billion long-term target, the Gulf diaspora could become a critical buffer for India's external finances before the September deadline.
Key Takeaways
Finance Minister Nirmala Sitharaman will meet PSB heads and financial institutions on Monday to review foreign currency deposit mobilisation.
The review covers FCNR(B) deposits , overseas foreign currency bonds, and ECBs , including those by IDBI Bank .
The RBI has removed the interest rate ceiling on fresh FCNR(B) deposits of 3–5 years until 30 September and introduced a concessional forex swap facility.
Industry has mobilised an estimated $3–4 billion through FCNR(B) deposits as of 3 July .
Bankers project the revised scheme will attract $40–50 billion in total FCNR(B) deposits over time, with Gulf-based NRIs expected to drive near-term inflows.
Finance Minister Nirmala Sitharaman is scheduled to meet the heads of public sector banks (PSBs) and financial institutions on Monday, 14 July 2025, to review progress on foreign currency deposit mobilisation and overseas borrowing initiatives aimed at strengthening India's external capital inflows, according to sources. The meeting will cover FCNR(B) deposits, overseas foreign currency bonds, and external commercial borrowings (ECBs) by PSBs and institutions including IDBI Bank.
Background: RBI's Push for NRI Deposits
The review follows a series of measures announced last month by the Reserve Bank of India (RBI) to incentivise banks to attract foreign currency deposits from Non-Resident Indians (NRIs), Overseas Citizens of India (OCIs), and Persons of Indian Origin (PIOs). Until 30 September, the central bank has withdrawn the interest rate ceiling on fresh FCNR(B) deposits with maturities of three to five years, enabling banks to offer more competitive rates to overseas depositors.
The RBI has also introduced a concessional foreign exchange swap facility for FCNR(B) deposits of three to five years, reducing the cost of hedging foreign currency exposure for banks. A similar concessional forex swap facility has been extended to encourage public sector undertakings (PSUs) to raise funds through ECBs, also valid until 30 September.
Early Inflows and Industry Estimates
Banks have already registered a gradual increase in overseas fund flows following the RBI's announcements, with awareness among NRIs reportedly growing. The industry had mobilised an estimated $3–4 billion through FCNR(B) deposits as of 3 July, according to reports. Bankers expect inflows to gather pace in the coming weeks, particularly from non-resident Indians based in the Gulf region.
Over the longer term, the revised scheme is expected to attract $40–50 billion in fresh FCNR(B) deposits, according to bankers. This would represent a substantial addition to India's external capital buffers at a time when global currency markets remain volatile.
What the Monday Meeting Signals
Sitharaman's direct engagement with PSB chiefs signals that the Centre is treating the FCNR(B) mobilisation drive as a priority external financing strategy, not a routine banking exercise. The meeting is expected to assess bank-wise performance, identify bottlenecks, and potentially accelerate outreach to NRI communities abroad.
Notably, this is one of the more targeted efforts by the government to leverage the Indian diaspora — estimated at over 32 million people worldwide — as a source of stable, long-duration foreign currency funding. With the Indian rupee and current account dynamics under watch, shoring up FCNR(B) inflows offers a relatively low-cost route to bolstering reserves.
What to Watch Next
Markets and policy watchers will track the outcome of Monday's meeting for any new directives or enhanced incentives. If the government signals a further relaxation of deposit rate caps or additional swap concessions, inflows could accelerate ahead of the 30 September deadline. The pace of Gulf-based NRI participation will be a key leading indicator in the weeks ahead.
Point of View
But NRI deposit behaviour is driven as much by rupee confidence and geopolitical stability as by basis-point differentials. The Gulf concentration risk is also worth flagging: if a significant share of projected inflows depends on one regional diaspora, a Gulf economic shock or rupee depreciation scare could quickly unwind the thesis. Monday's meeting will reveal whether the government has a plan B.
NationPress
10 Jul 2026
Frequently Asked Questions
Why is Finance Minister Sitharaman meeting PSB heads on Monday?
She is reviewing the progress of foreign currency deposit mobilisation and overseas borrowing initiatives by public sector banks, following RBI measures introduced last month to attract NRI deposits. The meeting will assess FCNR(B) deposit inflows, overseas bonds, and ECBs, including those by IDBI Bank.
What is an FCNR(B) deposit and why does it matter?
A Foreign Currency Non-Resident (Bank) deposit allows NRIs, OCIs, and PIOs to hold fixed deposits in India in foreign currencies such as US dollars or British pounds, shielding them from exchange-rate risk. These deposits are a key source of stable foreign currency funding for Indian banks and help bolster India's external reserves.
What RBI measures have been announced to boost FCNR(B) inflows?
The RBI has removed the interest rate ceiling on fresh FCNR(B) deposits with maturities of three to five years until 30 September, allowing banks to offer more competitive rates. It has also introduced a concessional foreign exchange swap facility for such deposits and a similar facility for PSU external commercial borrowings, both valid until 30 September.
How much has been mobilised so far under the scheme?
The industry had mobilised an estimated $3–4 billion through FCNR(B) deposits as of 3 July, according to reports. Bankers expect inflows to accelerate, particularly from Gulf-based NRIs, and project total collections of $40–50 billion over time.
When does the RBI's concessional FCNR(B) scheme expire?
Both the interest rate ceiling withdrawal on FCNR(B) deposits and the concessional forex swap facilities for banks and PSUs are valid until 30 September. The government and RBI are keen to maximise mobilisation before that deadline.
