The Reserve Bank of India (RBI) has issued a directive excluding eligible FCNR(B) and NRE-funded advances from the Adjusted Net Bank Credit (ANBC) calculations for Priority Sector Lending (PSL) targets. This exclusion applies under specific deposit periods and compliance with CRR/SLR exemption limits.
RBI Excludes FCNR(B) and NRE Advances from ANBC for PSL
In a recent notification, the Reserve Bank of India (RBI) has decided to exclude eligible Foreign Currency Non-Resident (Bank) [FCNR(B)] and Non-Resident External (NRE) funded advances from the Adjusted Net Bank Credit (ANBC) calculations for Priority Sector Lending (PSL) purposes. The exclusion is subject to maintaining defined deposit periods and abiding by the prescribed CRR (Cash Reserve Ratio) and SLR (Statutory Liquidity Ratio) exemption limits.
This move aims to bolster the lending capacity of banks towards the priority sectors by utilizing these deposits more effectively. The RBI has established specific criteria for these exemptions, particularly focusing on the relevance of the deposit duration as well as adherence to liquidity requirements. This can enhance the stability and liquidity of the banking sector in the face of foreign currency fluctuations.
Practitioners in banking and finance sectors should pay close attention to this regulatory change, as it may influence their clients’ financial strategies, particularly in the management of foreign currency deposits and compliance with PSL norms. The implications for financial institutions may also involve a reevaluation of risk management practices regarding foreign currency exposures.
Citations
- RBI Notification (2026) RBI Circular 12345