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 Adjusted Net Bank Credit (ANBC) calculation for Priority Sector Lending (PSL) targets, introducing specific deposit period conditions.
RBI Excludes FCNR(B) and NRE Advances from ANBC
The Reserve Bank of India (RBI) has issued a circular allowing the exclusion of certain eligible Foreign Currency Non-Resident (FCNR(B)) and Non-Resident External (NRE) funded advances from the Adjusted Net Bank Credit (ANBC) used to determine Priority Sector Lending (PSL) targets. This decision was made in light of the need to refine the regulatory framework surrounding such deposits.
The RBI clarified that this exclusion will only apply under specified deposit conditions and will be contingent upon meeting stipulated requirements concerning the Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) exemptions. These amendments reflect the RBI's ongoing efforts to ensure a balanced approach towards financial inclusion and liquidity management in the banking sector.
This amendment comes as part of a broader strategy to facilitate lending and encourage investment inflows through FCNR(B) and NRE deposits, which are pivotal in harnessing foreign capital into the Indian economy. The RBI aims to create a conducive environment for banks to meet their PSL obligations effectively.
Practitioners should be aware of this change as it can influence lending strategies and compliance approaches for banks, providing opportunities for leveraging foreign deposits while meeting regulatory targets effectively.
Citations
- Reserve Bank of India Notification No. 2026-21/PSL