Public Sector Banks Enhance Engagement with NRIs to Boost Deposits

Strengthening Ties with the NRI Community

Public Sector Banks (PSBs) have communicated to Union Finance Minister Nirmala Sitharaman their implementation of tailored outreach initiatives, including digital platforms, aimed at connecting with the non-resident Indian (NRI) community and boosting deposit collection. The Managing Directors and Chief Executive Officers reported a notable interest from NRIs based in regions such as Singapore, Hong Kong, the Middle East, the UK, the US, and other international locations, as stated by the Ministry of Finance.

They highlighted a clear upward trend in the mobilisation of Foreign Currency Non-Resident (Bank) [FCNR(B)] deposits, driven by competitive returns offered by banks. Minister Sitharaman engaged with the MDs and CEOs of PSBs and Public Financial Institutions (PFIs) to discuss FCNR(B) deposits, External Commercial Borrowings (ECBs), and Overseas Foreign Currency Borrowings (OFCBs) swap initiatives.

Recently, the Reserve Bank of India (RBI) relaxed interest-rate limitations on certain Non-Resident External (NRE) and FCNR(B) deposits, allowing banks more flexibility to provide higher interest rates on specific deposits held by NRIs. The RBI's amendments temporarily lifted interest rate caps on new NRE deposits with maturities of three years or more, as well as FCNR(B) deposits with terms of three to five years, effective until September 30, 2026.

During the discussions, banks also mentioned that the International Banking Units (IBUs) at the International Financial Services Centre (IFSC) in GIFT City, Gujarat, are being leveraged to attract funds from various regions, including the UK, US, Middle East, Hong Kong, Singapore, and Southeast Asia. Sitharaman encouraged banks to fully utilize the financial services and institutional resources available at GIFT City.

The RBI Deputy Governor assured that the central bank is committed to assisting banks and financial institutions in deposit mobilisation and facilitating eligible borrowings. The robust daily reporting system established by the RBI has enabled transparent, real-time tracking of progress across participating institutions. Minister Sitharaman expressed her appreciation for the positive initial response and urged banks to enhance their outreach to the NRI community, innovate deposit products, and maintain the momentum of deposit mobilisation throughout the duration of the schemes.