RBI Revises PSL Norms for Certain FCNR(B) and NRE Deposits
RBI Revises Priority Sector Lending (PSL) Norms for Certain FCNR(B) and NRE Deposits
The Reserve Bank of India (RBI) has amended the Priority Sector Lending (PSL) framework to provide for exclusion of certain advances backed by newly mobilised FCNR(B) and NRE deposits while calculating Adjusted Net Bank Credit (ANBC) for priority sector lending targets.
The change follows RBI’s recent measures relating to foreign currency deposits and liquidity requirements.
Background
In June 2026, RBI introduced a US Dollar–Rupee swap facility for fresh FCNR(B) deposits mobilised by banks for a minimum period of three years and up to five years.
RBI also provided temporary relief from the maintenance of Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) in respect of specified deposits mobilised during the notified period.
The exemptions cover:
- Fresh FCNR(B) deposits with a maturity of at least 3 years and up to 5 years mobilised between June 8, 2026 and September 30, 2026; and
- Fresh NRE term deposits having a tenor of 3 years or more mobilised between June 19, 2026 and September 30, 2026.
Deposits renewed upon maturity are also covered, subject to the applicable conditions.
What has RBI changed?
Under the amended PSL framework, banks can exclude certain advances extended in India against these eligible deposits from their ANBC for determining priority sector lending targets.
The exclusion applies to advances against:
- Eligible fresh FCNR(B) deposits of 3 to 5 years mobilised during the specified period; and
- Eligible NRE term deposits of 3 years or more mobilised during the specified period.
The deposits must qualify for the applicable exemption from CRR and SLR requirements.
Important limitation
The amount deducted from ANBC cannot exceed the amount of fresh FCNR(B) and NRE deposits that actually qualifies for exemption from CRR/SLR requirements under the relevant RBI directions.
Therefore, banks cannot claim an ANBC reduction beyond the eligible deposit amount.
Earlier provision removed
RBI has also deleted the earlier footnote that prescribed a calculation based on the difference between advances outstanding on specified historical dates and the relevant base date.
Consequently, the previous methodology linked to historical incremental advances from eligible FCNR(B)/NRE resources has been removed for this purpose.
Effective date: The amendment is effective immediately.
Key takeaway for banks
The amendment provides a temporary PSL-related benefit to banks mobilising eligible long-term FCNR(B) and NRE deposits during the specified June–September 2026 window. Advances backed by such deposits can, subject to the prescribed conditions and limits, be excluded from ANBC while computing the bank’s priority sector lending obligations.
Banks should therefore separately track eligible deposits and corresponding advances to ensure the ANBC deduction is correctly determined and does not exceed the qualifying deposit amount.
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