FCNR(B) Deposit Programme to Continue Until Set Date, RBI Confirms

Mumbai, August 5 – Addressing media questions after the latest Monetary Policy Review, RBI Governor Sanjay Malhotra affirmed that the FCNR(B) incentive scheme will remain active for its full contractual period, with no intention of an early termination.

Since its inception, the programme has served as a conduit for sizeable foreign capital. As of July 31, 2026, Indian banks have amassed about USD 36.7 billion via FCNR(B) deposits, a buffer that has steadied the rupee despite heightened pressure from climbing crude oil prices worldwide.

Financial experts warn that this influx could tip India’s forex reserves beyond the historic USD 700 billion threshold within the next few weeks.

The RBI’s zero‑cost swap arrangement, designed to support liquidity management, stays in effect until September 30, 2026. The Governor noted that the nation's external financial footing was already satisfactory before the introduction of these measures, and the latest steps have only reinforced that position.

He reiterated that the central bank does not aim for a predetermined exchange‑rate target; it permits market forces to set the rupee’s level within a reasonable band, stepping in only when volatility or speculative pressure escalates sharply.

Leading commercial banks, notably State Bank of India and ICICI Bank, have already secured a majority share – over half – of the total capital earmarked for collection under the FCNR(B) drive.

To broaden foreign‑currency attraction, the RBI momentarily eased interest‑rate ceilings on NRI‑focused deposit schemes, allowing banks to offer more lucrative returns on new FCNR(B) and NRE deposits. The updated framework, valid until September 30, 2026, removes the cap on interest rates for FCNR(B) deposits with tenures of three years or more and lifts similar restrictions on long‑term NRE deposits.

These regulatory relaxations empower banks to provide more appealing rates to overseas Indians and other foreign investors, thereby augmenting foreign‑currency inflows and strengthening the overall reserve position.