The Reserve Bank of India has permitted the exclusion of eligible FCNR(B) and NRE-funded advances from the Adjusted Net Bank Credit (ANBC) for Priority Sector Lending (PSL) targets, contingent on certain deposit duration regulations. This decision intends to enhance liquidity and investment in eligible sectors.
RBI Excludes FCNR(B) and NRE Advances from ANBC for PSL Targets
In a significant policy shift, the Reserve Bank of India (RBI) has announced the exclusion of eligible Foreign Currency Non-Resident (FCNR(B)) and Non-Resident External (NRE) funded advances from the calculation of Adjusted Net Bank Credit (ANBC) for the purpose of Priority Sector Lending (PSL) targets. This exemption will be subject to specified deposit periods as well as compliance with Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) exemption limits.
This move is aimed at encouraging banks to enhance their lending capabilities without the constraints imposed by the previous ANBC calculations, thus enabling greater financial support to priority sectors. The RBI's detailed guidelines stipulate the necessary conditions under which these exemptions will apply, which includes periods of deposit maturity.
Such changes in the regulatory framework underscore RBI's commitment to facilitate a more conducive banking environment and promote investment in sectors that require financial stimulus. As this exclusion takes effect, banking professionals should carefully assess the impact on their PSL strategies and adapt their lending approaches accordingly.
Citations
- RBI Circular (2026) RBI/2026-2027/XX