RBI May Offer NRI Deposit Incentives In MPC Review To Support Rupee
The RBI may introduce incentives for NRI deposits, including possibly reviving FCNR(B) schemes, to support the weakening rupee. NRI deposits and FCNR flows have declined sharply, increasing pressure on the currency. The central bank has already taken forex measures as the rupee weakened amid the ongoing war and global uncertainties
The Reserve Bank of India is gearing up for another move in a bid to contain the free fall of the domestic currency.
In the ongoing monetary policy committee (MPC) review, the banking regulator may announce incentives for non-resident Indian (NRI) deposits, according to a report by Moneycontrol.
Though it is not yet known what the specific incentives could be, it is expected that the RBI may reintroduce the foreign currency non-resident (FCNR (B)) deposit route to attract and incentivise foreign deposits.
ALSO READ
This would also ease some pressure on the Indian rupee. The United Arab Emirates (UAE) alone accounts for more than 40 percent of FCNR (B) deposits at Indian banks, according to the report.
This shows the high concentration in the Gulf region, which is currently reeling under the war.
According to a report by Macquarie Capital based on recent data by the Reserve Bank of India, NRI deposits declined nearly 26 percent in the April 2025–January 2026 period to $14.35 billion.
FCNR-B flows have also dropped to just $0.94 billion in the same period compared to $7.02 billion last year.
This sharp decline has likely prompted the Reserve Bank to plug the gaps and cushion the rupee.
“If rupee weakness continues unabated, we think that other policies tried in the past such as FCNR (B) subsidised swap windows to attract NRI deposits like what was done in 2013 are possible (and were done successfully then), although the cost now is much higher given where global/US interest rates are,” the Moneycontrol report quoted Michael Wan, Senior Economist at Japanese bank MUFG, as saying.
Indian rupee has declined over 2 percent of its value against the US dollar since the start of the war. At one point, it had fallen as much as 4 percent to reach 94.86 a dollar but pared some losses after the central bank stepped in.
The RBI has restricted bank net overnight foreign exchange positions at $100 million and banned banks from offering rupee non-deliverable forwards (NDFs) to clients.
RECENT STORIES
-
-
-
-
-