RBI Allows Loans Against NRI Forex Deposits To Boost Inflows

India is making a fresh push to attract foreign currency from its overseas community. The Reserve Bank of India (RBI) has allowed banks to offer loans against certain foreign-currency deposits raised from Non-Resident Indians (NRIs), a move that could bring billions of dollars into the country over the coming months. Banks are already marketing these deposits with returns of more than 7%, while some lenders expect leverage of up to nine times the deposit amount.

What Has The RBI Allowed Banks To Do?

As per a Bloomberg report, India received more than $155 billion in remittances during FY26, and bankers believe the latest scheme could attract significant additional inflows from the country's 35-million-strong diaspora.

Under the latest clarification, banks can now extend loans to overseas residents against eligible foreign-currency deposits and place a lien on those deposits. Banks can also issue letters of credit linked to these deposits.

Industry executives expect lenders to offer leverage of up to nine times in some cases. Combined with deposit rates above 7%, the product is being positioned as an attractive option for NRIs looking to earn higher returns on dollar savings.

The RBI has also said it will provide a foreign-exchange swap facility for eligible deposits, covering the principal amount and helping banks manage hedging costs.

Why Is India Trying To Attract More Dollar Deposits?

The latest measures are part of a broader effort to increase foreign currency inflows into India. Earlier this month, the RBI announced a series of steps, including support for FCNR(B) deposits and overseas borrowings.

The strategy is similar to the approach used during the 2013 taper tantrum period, when India mobilised around $34 billion through NRI-focused deposit schemes. This time, bankers believe inflows could be much larger, with some estimates suggesting the programme could attract up to $80 billion if participation remains strong.

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The key focus over the next few months will be the actual amount of money that flows into the system before the 30 September deadline attached to some of the RBI's incentives. If inflows pick up as expected, the scheme could provide a meaningful boost to India's foreign exchange reserves and strengthen the country's external position.

Sources:

The Times of India

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