Mumbai: The Reserve Bank of India (RBI) is set to hold a meeting with executive directors of banks on Wednesday as part of its customary pre-monetary policy consultations, with discussions expected to focus on accelerating mobilisation of foreign currency non-resident bank (FCNR-B) deposits, two people aware of the development said.
The agenda also includes improving transmission of policy rates to deposits and loans, and ensuring adequate credit flow to productive sectors of the economy. The meeting is with RBI executive director Indranil Bhattacharya, according to people in the know.
While the agenda will cover broader banking issues, the central bank is expected to place particular emphasis on FCNR(B) deposit mobilisation to sustain foreign currency inflows under the temporary regulatory relaxations announced in June, they said.
An email sent to RBI on the matter had not received a response till press time.
This has come as both the government and RBI met with bank chiefs on 13 July and 14 July, respectively, to nudge bankers to intensify their outreach programmes to NRIs to bring more flows into the country through the incentivized FCNR scheme.
In the review meeting with chiefs of public sector banks and public financial institutions on Sunday, finance minister Nirmala Sitharaman urged lenders to step up outreach to NRIs, introduce innovative deposit products and sustain the momentum in foreign currency mobilisation.
Banks informed the government that they were witnessing healthy interest from NRIs across Singapore, Hong Kong, West Asia, the UK and US, while also outlining customised digital outreach strategies to boost FCNR deposits.
Mint reported on 13 July that banks are selectively choosing FCNR(B) deposits from NRIs with over $1 million in deposits as overseas funding costs rise. Smaller leveraged deposits are becoming infeasible, which could undermine India's goal of attracting $30-40 billion in inflows.
Govt, RBI step up pressure on lenders
The scheme, announced on 5 June and valid till 30 September, allows banks to raise FCNR(B) deposits for three to five years and swap the dollars with RBI at a concessional rate.
The government and the central bank have been trying to drum up support for the scheme aimed at raising dollar inflows into the world’s sixth-largest economy to bolster its local currency. The central bank has asked banks to report daily data on FCNR deposits and meet with lenders on Tuesday.
These meetings have come at a crucial time, as geopolitical concerns that had briefly eased and supported the Indian rupee have escalated again after US President Donald Trump said last week that the interim peace deal with Iran was over. So far this financial year, the rupee has depreciated by more than 3%, hitting a record low of 96.82 against the US dollar on 20 May. In FY26, the local unit had depreciated by 11%.
According to the central bank, its discussions with bank managing directors (MDs) covered broad issues relating to the financial sector, including technology adoption, customer service, financial inclusion, fraud prevention, central bank digital currency (CBDC), central KYC record registry (CKYCR), retail Direct and other initiatives.
However, market participants believe the central bank wants banks to intensify these efforts before the 30 September deadline for the FCNR(B) relaxation. RBI is also expected to review how effectively banks are transmitting previous policy rate changes to depositors and borrowers, and whether credit is flowing adequately to productive sectors of the economy, the people said.
Strengthening forex reserves
RBI, along with the government, announced a series of measures in June to encourage foreign currency inflows into the country and protect the Indian rupee, including relaxations for FCNR(B) deposits, external commercial borrowings (ECBs), and overseas foreign currency borrowings (OFCBs). The measures were aimed at strengthening foreign exchange reserves and providing banks greater flexibility in raising overseas funds.
The RBI’s Monetary Policy Committee is widely expected to keep policy rates unchanged at 5.25% at its upcoming meeting on 7 August.
Banks mobilized $166 million in fresh FCNR(B) deposits in April 2026, while the outstanding FCNR(B) deposit base stood at $33.92 billion at the end of April, up from $33.76 billion a month earlier, latest RBI data showed. Overall, NRI deposits across FCNR(B), non-resident external (NRE) and non-resident ordinary (NRO) accounts stood at $165.59 billion, indicating that FCNR(B) deposits account for roughly one-fifth of the total NRI deposit base. Updated data is unavailable due to a lag.