Government Asks PSBs To Step Up NRI Deposit Mobilisation To Boost Forex Reserves

Government Asks PSBs To Step Up NRI Deposit Mobilisation To Boost Forex Reserves

New Delhi, Jul 14 (KNN) The government has asked public sector banks to step up efforts to mobilise foreign currency deposits from non-resident Indians (NRIs) as part of measures to strengthen India's foreign exchange reserves and support the rupee.

Government Pushes NRI Deposit Mobilisation

At a meeting on Monday, Finance Minister Nirmala Sitharaman directed state-owned banks to intensify engagement with the Indian diaspora through outreach programmes, digital channels and innovative foreign currency deposit products, according to an official statement.

Separately, Reserve Bank of India (RBI) Governor Sanjay Malhotra is scheduled to meet the heads of public and private sector banks to review strategies for increasing overseas deposit inflows and address operational challenges affecting fund mobilisation.

RBI Measures Aim To Boost Forex Inflows

The initiatives come amid geopolitical tensions in West Asia, which have put pressure on the rupee and India's foreign exchange reserves, reported Business Standard.

In June, the RBI announced measures to encourage banks to raise foreign currency deposits by offering full support for hedging costs on deposits with maturities of three to five years and permitting banks to borrow against such funds.

Backed by the RBI's hedging support, banks are offering interest rates of up to 7.5 percent on eligible foreign currency deposits. Industry estimates suggest the initiative could attract inflows of around USD 50 billion.

2013 Scheme Serves As A Template

The programme is similar to the RBI's 2013 foreign currency deposit mobilisation scheme, which attracted nearly USD 34 billion during the ‘taper tantrum’ period and helped stabilise the rupee.

Banks Report Positive Response From NRIs

The Finance Minister also encouraged public sector banks to leverage the banking ecosystem at GIFT City to mobilise overseas funds more effectively.

According to bank executives, the scheme has received encouraging responses from NRIs in Singapore, Hong Kong, the Middle East, the United Kingdom, the United States and other overseas markets.

Banks also reported growing interest among Indian companies seeking to raise funds abroad and expect overseas borrowings to gather pace during the October-December quarter.