RBI Exempts FCNR(B) Deposits from CRR and SLR for UCBs RCBs and RRBs

The Reserve Bank of India (RBI) has granted regulatory relief to Urban Co-operative Banks (UCBs), Rural Co-operative Banks (RCBs) and Regional Rural Banks (RRBs) by allowing eligible Foreign Currency Non-Resident (Bank) [FCNR(B)] deposits to be excluded from reserve maintenance requirements.

The measure forms part of the RBI’s broader initiatives to encourage foreign currency inflows and support mobilisation of NRI deposits under the recently announced swap facility framework.

1. Eligible FCNR(B) Deposits Covered

The exemption applies to:

• Fresh FCNR(B) deposits mobilised by UCBs, RCBs and RRBs;
• FCNR(B) deposits renewed upon maturity; and
• Deposits having a tenor of three years to five years.

Only deposits satisfying these conditions will be eligible for the benefit.

2. Deposit Mobilisation Window

To qualify for the exemption, the FCNR(B) deposits must be mobilised during the period:

08 June 2026 to 30 September 2026

The relaxation is available only for deposits raised within this specified window.

3. Exemption From CRR and SLR Requirements

Under the RBI notification, eligible FCNR(B) deposits may be excluded from:

• Cash Reserve Ratio (CRR) requirements; and
• Statutory Liquidity Ratio (SLR) requirements.

This relief reduces the reserve maintenance burden on participating banks and makes mobilisation of FCNR(B) deposits more attractive.

4. Effective Date of the Exemption

The exemption shall apply from the:

Reporting fortnight beginning 01 July 2026

Accordingly, eligible deposits may be excluded from CRR and SLR computations from that reporting period onwards.

5. Benefit Available for Entire Deposit Tenure

The RBI has clarified that the exemption shall continue to apply to the original deposit amount for as long as the eligible FCNR(B) deposit remains on the bank’s books.

Thus, once a qualifying deposit becomes eligible, the benefit will continue throughout the life of the deposit, subject to compliance with the prescribed conditions.

6. Alignment With RBI’s Forex Mobilisation Measures

The relaxation complements the RBI’s recently introduced foreign exchange mobilisation initiatives, including the USD-INR Forex Swap Facility for FCNR(B) deposits.

Together, these measures are intended to encourage banks to mobilise additional foreign-currency deposits from Non-Resident Indians (NRIs) and to strengthen foreign-exchange inflows.

7. Expected Impact

The exemption is expected to:

• Encourage UCBs, RCBs and RRBs to mobilise FCNR(B) deposits;
• Reduce the regulatory cost of foreign currency deposit mobilisation;
• Enhance foreign exchange inflows into the banking system;
• Improve liquidity management; and
• Support India’s external sector stability.

8. Objective of the RBI Measure

The RBI’s decision seeks to incentivise foreign currency deposit mobilisation by providing reserve requirement relief on eligible FCNR(B) deposits.

By exempting such deposits from CRR and SLR maintenance requirements, the RBI aims to strengthen foreign exchange resources, improve funding flexibility for cooperative and regional rural banks, and support the broader objective of enhancing foreign currency inflows into the Indian financial system.