Finance Minister Sitharaman To Meet PSU Banks On Foreign Currency Deposit Mobilisation
Sitharaman reviews foreign currency deposit plans with PSU banks.
Finance Minister Nirmala Sitharaman is scheduled to meet the heads of public sector banks (PSBs) and financial institutions on Monday to review efforts aimed at mobilising foreign currency deposits and strengthening overseas fundraising channels. The meeting will focus on progress related to Foreign Currency Non-Resident (Bank) [FCNR(B)] deposits, Overseas Foreign Currency Bonds and External Commercial Borrowings (ECBs).
According to sources, the meeting will include representatives from public sector banks as well as financial institutions such as IDBI Bank. The discussions are expected to assess the steps being taken by banks to attract foreign currency deposits from Non-Resident Indians (NRIs), Overseas Citizens of India (OCIs) and Persons of Indian Origin (PIOs).
The review comes after the Reserve Bank of India (RBI) temporarily removed the interest rate ceiling on fresh FCNR(B) deposits with maturities of three to five years until September 30. The move was introduced to encourage greater foreign currency inflows at a time when FCNR(B) deposit mobilisation had weakened significantly, with net inflows falling to USD 946 million in FY26 from USD 7.1 billion in FY25.
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The RBI has also introduced a concessional foreign exchange swap facility for banks accepting FCNR(B) deposits in the three-to-five-year maturity category. The facility is expected to reduce the cost of hedging foreign currency exposure for banks and make such deposits more attractive.
In addition, the central bank announced a similar concessional forex swap facility to encourage public sector enterprises to raise funds through External Commercial Borrowings until September 30, 2026. State-owned enterprises, particularly central public sector enterprises, generally raise around USD 10–12 billion annually through ECBs, and the new facility is expected to support increased overseas borrowing.
A report by SBI Research said the concessional forex swap arrangement could accelerate ECB issuances by public sector companies and help them access international funds at more competitive rates. The Finance Minister is also expected to encourage banks to improve credit flow towards productive sectors of the economy during the meeting, while reviewing broader strategies for strengthening foreign currency mobilisation.
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