Move follows RBI’s special FCNR(B) window as lenders step up efforts to attract overseas Indian savings
Abu Dhabi’s First Abu Dhabi Bank (FAB), the United Arab Emirates’ largest lender, is aiming to mobilise around $1.5 billion in deposits from Non-Resident Indians (NRIs), joining Indian banks in efforts to channel overseas savings into India under the Reserve Bank of India’s (RBI) special foreign currency deposit initiative.
The bank plans to attract funds through Foreign Currency Non-Resident (Bank), or FCNR(B), deposits, which have gained renewed interest after the RBI introduced a temporary swap facility designed to encourage banks to raise foreign currency deposits. Under the scheme, the central bank provides hedging support, allowing banks to offer more attractive returns to overseas investors while strengthening India’s foreign exchange reserves.
The latest move comes as competition intensifies among banks seeking to tap the large Indian diaspora, particularly in the Gulf region. Several lenders have launched specialised FCNR(B) products with enhanced interest rates and financing options aimed at encouraging larger deposits from eligible NRIs. However, banks have also cautioned that leveraged investment strategies carry risks and may not be suitable for all investors.
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The RBI’s special window, which remains open until the end of September, has already generated strong inflows
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According to recent banking industry data, lenders have mobilised more than $20 billion under the scheme, with FCNR(B) deposits accounting for the majority of the funds raised
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The initiative is intended to reinforce India’s foreign exchange reserves and improve liquidity amid global economic uncertainty
Analysts believe continued participation by international and Indian banks could further increase inflows from the global Indian community. While higher returns are expected to remain a key attraction, financial experts advise NRIs to evaluate investment structures carefully, particularly where borrowing or leverage is involved, before committing funds.
