The Reserve Bank of India (RBI) has launched a new initiative to attract foreign currency deposits from Non-Resident Indians (NRIs), a strategy drawing significant comparisons to a highly successful scheme introduced over a decade ago. This latest push aims to inject billions of dollars into India's economy, stabilize the rupee, and strengthen the nation's foreign exchange reserves.
Echoes of the 2013 Playbook
In September 2013, amidst global market turmoil triggered by the US Federal Reserve's "taper tantrum" and a sharply depreciating rupee, the RBI implemented a special Foreign Currency Non-Resident Bank (FCNR(B)) swap window. This measure proved incredibly effective, mobilizing approximately $34 billion in NRI deposits within weeks, according to CA Kanan Bahl, founder of Fingrowth Media. A report by Motilal Oswal Financial Services further detailed that the 2013 scheme led to about $27 billion through FCNR(B) deposits and a total of nearly $34 billion in NRI deposit inflows in FY14, significantly bolstering India's financial position.
How the Current Scheme Compares
The latest measures, announced in June 2026, empower banks to raise FCNR(B) deposits with maturities ranging from three to five years. A key feature of this scheme is that the RBI will bear the entire hedging cost when banks swap these foreign currency proceeds into rupees. Additionally, these deposits are exempt from Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) requirements, making them more attractive for banks.
These incentives have allowed banks to substantially increase FCNR(B) deposit rates, with many large banks now offering around 6% and smaller lenders providing up to 7%. This represents a significant jump of 200-300 basis points from earlier rates of 3-4%, as noted by Motilal Oswal. Experts like Kanan Bahl believe these competitive returns will encourage NRIs to channel more of their savings into India once again.
Impact on Reserves and the Rupee
The previous 2013 scheme had a profound impact beyond just attracting deposits. Motilal Oswal's report indicated that the inflows strengthened India's foreign exchange reserves by $12 billion in FY14, and the average USD-INR exchange rate appreciated by 3.4%. Following the 2013 measures, foreign exchange reserves saw significant improvement, and liquidity conditions gradually eased.
Motilal Oswal Financial Services projects that the current measures could attract $40-50 billion in foreign exchange inflows in FY27, which would further improve liquidity and support the Indian currency. The brokerage anticipates the USD-INR exchange rate could strengthen to around 93-94 in the near term. While broader economic and global factors will always play a role, the RBI's re-activation of this successful strategy demonstrates a proactive approach to leveraging the financial strength of India's global diaspora to navigate potential currency stress.