Summary of this article
Sitharaman to review PSBs' foreign currency deposit mobilisation efforts.
RBI measures aim to improve foreign currency inflows and borrowing.
Credit flow and overseas funding plans to be reviewed.
Union Minister of Finance Nirmala Sitharaman will chair a meeting with the heads of public sector banks (PSBs) and financial institutions on July 13, 2026 to review the progress of foreign currency deposit mobilisation and overseas borrowing plans.
Meeting To Focus On Foreign Currency Deposits
The meeting will include senior executives from public sector banks and financial institutions. Discussions are expected to cover Foreign Currency Non-Resident (Bank), or FCNR(B), deposits, Overseas Foreign Currency Bonds and External Commercial Borrowings (ECBs), according to a PTI report.
The review comes after the Reserve Bank of India (RBI) last month announced temporary measures to encourage banks to attract more foreign currency deposits from non-resident Indians (NRIs), overseas citizens of India (OCIs) and persons of Indian origin (PIOs).
RBI Measures Aim To Boost Foreign Currency Inflows
The RBI withdrew the interest rate ceiling on fresh FCNR(B) deposits with maturities of 3-5 years until September 30, 2026. The move allows banks to offer more competitive interest rates to eligible overseas depositors.
The central bank also introduced a concessional foreign exchange swap facility for banks accepting these deposits. The facility reduces the cost of hedging foreign currency exposure, making it cheaper for banks to mobilise such deposits.
The measures followed a sharp decline in FCNR(B) deposit inflows. Net inflows have dropped to $946 million in FY26 from $7.1 billion in FY25.
The RBI has also announced a concessional forex swap facility for public sector undertakings raising funds through external commercial borrowings until September 30, 2026.
Credit Flow And Overseas Borrowing On Agenda
Central public sector enterprises typically raise around $10-12 billion every year through ECBs. With a borrowing cost advantage of around 3 per cent under the temporary facility, many enterprises are expected to advance their overseas borrowing plans.
An SBI Research report noted that the concessional forex swap facility should support higher ECB issuances by public sector undertakings. It added that the measure could help these entities access overseas funds at competitive net pricing.
The report also pointed out that total External Commercial Borrowing and Foreign Currency Convertible Bond (FCCB) flows have fallen by around 30 per cent to $42.9 billion in FY26 from $61.2 billion in FY25.
The meeting will assess how banks have responded to the RBI’s temporary measures and whether further efforts are needed to improve foreign currency inflows and support the funding requirements of the banking system and public sector enterprises.
