Banks report encouraging response from overseas Indians as government steps up efforts to boost foreign currency inflows and strengthen the rupee
PRAVASISAMWAD.COM
The Reserve Bank of India’s (RBI) special foreign currency deposit and swap schemes have received a strong initial response from non-resident Indians (NRIs), particularly in Singapore, Hong Kong, West Asia, the United Kingdom and the United States, according to senior public sector bank executives.
The positive feedback emerged during a review meeting chaired by Finance Minister Nirmala Sitharaman with the heads of public sector banks and financial institutions. Lenders informed the government that interest in Foreign Currency Non-Resident (Bank) [FCNR(B)] deposits, External Commercial Borrowings (ECBs) and Overseas Foreign Currency Borrowings (OFCBs) has been encouraging since the RBI announced a package of measures to attract overseas funds.
The RBI introduced a zero-cost foreign exchange swap facility in June, allowing banks to offer more attractive returns on fresh FCNR(B) deposits. The schemes are aimed at increasing foreign currency inflows, strengthening India’s foreign exchange reserves and supporting the rupee amid global economic uncertainty and higher crude oil prices.
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According to bank executives, customised outreach campaigns and digital engagement initiatives have helped generate strong interest among the Indian diaspora
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Banks are also making greater use of International Banking Units at GIFT City to mobilise deposits from overseas financial centres, including Singapore, Hong Kong, the UK, the US and the Gulf region
The Finance Minister urged lenders to intensify engagement with overseas Indians, introduce innovative deposit products and maintain momentum during the remaining period of the schemes. RBI officials also assured banks of continued support and said the central bank’s reporting framework would help monitor progress in real time.
Market estimates suggest the initiative has already attracted close to US$10 billion, although economists believe total inflows could eventually reach between US$30 billion and US$60 billion before the schemes close later this year. Such inflows are expected to help ease pressure on the rupee and improve India’s external financial position.
