The RBI has exempted fresh FCNR(B) deposits, with a tenor of 3-5 years, from Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) requirements until September 30, 2026, to boost foreign currency inflows via a new swap facility.
The Reserve Bank of India (RBI) has exempted fresh Foreign Currency Non-Resident (Bank) [FCNR(B)] deposits mobilised by banks from Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) requirements, in a move aimed at facilitating foreign currency inflows under the announced US Dollar-Rupee swap facility.
In four separate notifications issued on Monday for commercial banks, small finance banks, rural co-operative banks and regional rural banks, the central bank said the exemption would apply to fresh FCNR(B) deposits with a minimum tenor of three years and a maximum tenor of five years raised up to September 30, 2026.
Details of the Exemption
The RBI said the move follows the Governor's announcement on June 5. In all four notifications, the central bank noted that it had been decided "to introduce a US Dollar-Rupee swap facility for fresh Foreign Currency Non-Resident (Bank) [FCNR (B)] dollar funds, mobilised for a minimum tenor of three years and maximum tenor of five years."
Referring to the existing CRR and SLR directions, the RBI said, "It has been decided that fresh FCNR (B) deposits of minimum tenor of three years and maximum tenor of five years mobilized (including deposits that are renewed upon maturity) by the banks from the date of this Amendment Directions till September 30, 2026 will be exempted from maintenance of CRR and SLR."
Scope and Implementation
The exemption covers commercial banks, small finance banks, rural co-operative banks and regional rural banks through corresponding amendments to their respective CRR and SLR directions for 2025.
The provisions shall come into force with immediate effect.
Expected Impact
According to the RBI, "The exemption on reserves maintenance is available for the original deposit amounts till such time the deposits are held in the bank books."
The measure is expected to make FCNR(B) deposits more attractive for banks by lowering regulatory costs and supporting the mobilisation of foreign currency resources through the special swap window announced. (ANI)
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