Loans against FCNR B deposits exempt from priority sector

Mumbai: Bank loans given against fresh foreign currency non resident (bank) (FCNR (B)) deposits raised between June 8 and September 30 will not be included in the net bank credit and will hence be exempted from mandatory priority sector calculations, RBI said in a notification.

Advances against NRE term deposits raised by banks between June 19 and September 30 will also be excluded from these calculations, RBI said.

The RBI had earlier also provided an exemption to banks from maintenance of cash reserve ratio (CRR) and statutory liquidity ratio (SLR) on fresh FCNR (B) deposits including deposits that are renewed upon maturity. Loans given against these deposits will also now be exempt from central bank norms. RBI rules say that a minimum of 40% of net bank credit must be made to so called priority sectors which include loans to agriculture, MSMEs, export credit, education, housing, weaker sections etc.


The Reserve Bank of India's special measures to attract foreign exchange have brought in $40.81 billion until July 31, driven largely by FCNR(B) deposits which accounted for $36.72 billion of the inflows, exceeding the $26 billion mobilised under a similar scheme in 2013. Banks can swap these deposits with the RBI under a zero-cost hedging facility available until September 30.