The RBI has also introduced incentives such as subsidised hedging costs for FCNR deposits. Analysts estimate the scheme could attract up to $55 billion in foreign currency inflows over the coming months. | Photo Credit: Reuters

India's central bank has allowed domestic lenders to extend ​loans to non-residents against foreign currency deposits, including ‌via their offshore branches, the Reserve Bank ​of India said in a ⁠notice on Tuesday.

The move is expected to boost the overall amount of FX deposits garnered via ‌the route, which was announced earlier this month as part of a ‌broader measures to bolster dollar inflows into ‌the ⁠country.

Here are the details from the ⁠RBI's notice:

* Under the scheme to raise FX deposits, Indian banks will be allowed to extend loans ​to non-residents from ‌their overseas branches, including via those in India's tax-neutral GIFT City, using deposits garnered as collateral

* Domestic lenders will also be ‌allowed to issue a standby letter of ​credit against such FX deposits

* Banks will be able to extend ⁠loans to foreign currency deposit holders and place a lien on such accounts

* RBI's swap ‌will cover only the principal amount of the deposits and not the interest component

* Banks will be allowed to undertake swaps for tenors of less than three years for foreign currency deposits, provided they have ‌mobilised eligible foreign-exchange deposits for a minimum period of ​three years

* Earlier this month, the RBI offered to subsidise hedging costs ⁠for foreign currency non-resident (FCNR) deposits as a way to ⁠encourage banks to bring in dollar flows from the Indian diaspora

* Brokerage ‌Nomura estimates the scheme could attract $55 billion, with the bulk expected in August and ​September

Published on June 23, 2026