(Aug 5): India is not considering an early closure of a programme aimed at attracting deposits from the country’s 35-million-strong diaspora, with the central bank expecting robust inflows until the window shuts in end-September.
“We do hope to get good, healthy flows going forward,” Reserve Bank of India Governor Sanjay Malhotra told reporters in Mumbai on Wednesday. “As of now, there is no proposal under consideration to close this scheme prematurely,” he added, speaking to reporters after the monetary policy committee voted to keep interest rates unchanged.
The measure, introduced in June, allows local banks to offer attractive rates on foreign-currency deposits with the central bank subsidising hedging costs. Bankers and analysts hope the programme will potentially draw in more than US$50 billion (RM204.72 billion) from Indians living overseas. Some lenders are also offering loans amounting to several times the original deposit placed at a participating bank.
The move has prompted state-run, private and foreign lenders to step up fundraising from the Indian diaspora, boosting forex reserves when the rupee is struggling against the dollar.
Many overseas Indians maintain strong financial ties with their homeland, holding bank deposits in the South Asian country, sending money back to support their families and investing in Indian assets. Inbound remittances topped US$155 billion in the 2025-26 financial year.
Latest figures released by the RBI showed the amount mobilised through foreign currency non-resident, or FCNR(B), deposits at US$36.72 billion as of July 31. That, along with inflows through overseas foreign currency loans and external commercial borrowings, takes the total to about US$41 billion.
State Bank of India, the country’s largest lender, has garnered FCNR(B) deposits worth US$13.82 billion as of July 30, the highest across domestic and foreign peers.
Malhotra said the central bank has no target in mind and that the rupee liquidity generated by the forex deposits is "manageable".
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