RBI pushes FCNR(B) deposits to revive NRI inflows and bolster rupee

The Reserve Bank of India (RBI) announced it will bear the full hedging cost for banks raising fresh FCNR(B) deposits until 30 September 2026. The move seeks to revive NRI deposits, which have flat‑lined at about US$166 billion in FY 2026 after a decade of growth. The RBI hopes the scheme will repeat the success of its 2013 swap‑window initiative that lifted total NRI deposits from US$71 billion to US$127 billion by FY 2016. The Bank of Baroda report projects an 8‑10% rise in NRI deposits over the next five years.

Within the NRI portfolio, Non‑Resident Ordinary (NRO) accounts are the fastest‑growing segment, posting a compound annual growth rate of roughly 12% over the past five to ten years and increasing their share of total NRI deposits from 11.7% in FY 2019 to 20.1% in FY 2026. The growth reflects rising domestic income earned by overseas Indians from rent, dividends, pensions and asset sales.

Separately, the RBI is using incoming dollar inflows to strengthen foreign‑exchange reserves, reportedly purchasing US$3‑5 billion in recent sessions and gradually reducing its US$110 billion forward dollar commitments. These actions are expected to moderate the rupee’s appreciation as India‑US trade talks gather pace, with the rupee rebounding against a firm US dollar.