Union Finance Minister Nirmala Sitharaman will hold a crucial review meeting with the heads of all public sector banks and IDBI Bank on Monday, July 13th. The primary objective of the meeting is to increase foreign exchange inflows into the country and review the efforts of public sector banks to raise foreign currency deposits.
This meeting was announced by the Reserve Bank of India last month, following a series of major decisions by the Reserve Bank of India, which has since made several significant changes aimed at attracting NRIs and overseas Indian citizens to deposit money in India.
The meeting will primarily discuss three areas:
- FCNRB deposits (remittances flowing into foreign currency non-resident accounts).
- Foreign bonds (bonds issued by public sector banks to raise funds abroad).
- ECBs (debt borrowings from foreign markets by Indian companies and public sector companies).
FCNRB deposits with a three- to five-year term
Additionally, to help banks raise foreign currency, the RBI has provided two major relief measures until September 30th. The RBI has temporarily lifted the interest rate cap on new FCNRB deposits with a three- to five-year term. This allows Indian banks to offer higher interest rates to foreign depositors. To protect banks from losses due to dollar and rupee fluctuations, the RBI has also provided concessional forex swaps. Similarly, this concessional facility has been extended to government companies for borrowing from abroad.
According to banking sources and a report by NDTV Profit, banks are receiving a positive response to the new concessions. As of July 3rd, banks have raised approximately $3 to $4 billion through FCNRBs. Banking officials also believe that this investment will further accelerate in the coming days, especially from the NRIs living in the Gulf countries. Banking experts also estimate that with the help of the new scheme, new foreign investment worth $40 to $50 billion may come into the country in the coming time, which will strengthen the Indian rupee.