Loans backed by eligible new FCNR(B) and NRE deposits will be excluded from banks’ priority-sector lending calculations
The Reserve Bank of India (RBI) has eased the calculation of priority-sector lending obligations for banks, in a move aimed at encouraging fresh, longer-term deposits from non-resident Indians (NRIs).
Under a circular issued on Friday, the central bank said advances in India backed by certain newly mobilised NRI deposits will be excluded from the Adjusted Net Bank Credit (ANBC) used to determine banks’ priority-sector lending targets.
The exemption covers loans against fresh Foreign Currency Non-Resident (Bank), or FCNR(B), deposits with maturities of three to five years that are mobilised between June 8 and September 30, 2026. It also applies to loans backed by fresh Non-Resident External (NRE) term deposits with a tenure of at least three years raised during the same period.
Deposits renewed on maturity are also covered by the measure.
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The move follows measures announced by the RBI in June to attract foreign-currency funds from NRIs
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Eligible FCNR(B) deposits received during the specified period can benefit from exemption from cash reserve ratio and statutory liquidity ratio requirements, along with access to a special US dollar-rupee swap facility
By excluding related advances from the ANBC calculation, the RBI is reducing the additional priority-sector lending burden that banks could otherwise face when mobilising these deposits. Priority-sector lending requires banks to direct a prescribed share of credit towards areas such as agriculture, micro and small enterprises and other identified sectors.
The RBI has also placed a limit on the relief. The amount excluded from ANBC cannot exceed the value of deposits that qualify for the related CRR and SLR exemptions.
The latest measure is expected to make longer-term NRI deposits more attractive to banks while supporting foreign-currency inflows into India. It also provides lenders with some regulatory flexibility without removing their broader priority-sector lending obligations.
