Banks seek relief from sustainable lending norms for FCNR(B) loans

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The Economic Times daily newspaper is available online now. Read Today's Paper Banks seek relief from sustainable lending norms for FCNR(B) loansBy Dheeraj Tiwari, ET BureauLast Updated: Oct 26, 2026, 07:06:00 AM ISTSynopsis

Banks have approached the International Financial Services Centres Authority regarding sustainable lending targets for international banking units. The request stems from a significant rise in Foreign Currency Non-Resident deposits at GIFT City. These deposits have surged following the Reserve Bank of India's swap facility introduced in June. It is expected that the IFSCA may provide similar exemptions as the RBI has done before.

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Loading...×New Delhi: Banks have reached out to the International Financial Services Centres Authority (IFSCA) to exclude loans extended by international banking units (IBUs) against Foreign Currency Non-Resident (Bank) [FCNR(B)] deposits from the computation of mandatory sustainable lending targets.

As per the existing regulations, IBUs are required to deploy an amount equivalent to at least 5% of their aggregate loans disbursed and specified investments made in the preceding financial year towards sustainable lending and investments.

"Some banks already had an informal discussion with IFSCA and now we plan to send a formal request after internal consultation with all stakeholders," said a bank executive, requesting anonymity. This comes as their has been a sharp increase in FCNR(B) mobilisation through GIFT City following the Reserve Bank of India's (RBI) special foreign exchange swap facility introduced in June.

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As per IFSCA data, till August 31, 20 IBUs at GIFT IFSC had sanctioned $54.02 billion under the RBI's FCNR(B) swap facility, of which $52.82 billion had been disbursed. "A special carve out can also be considered by the authority, as lenders will not be able to deploy these large amount given the limited investment avenues in the sector," said another bank executive, requesting anonymity.

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"The RBI has already given special exemptions in case of priority sector lending and maintenance of cash reserve ratio (CRR) and statutory liquidity ratio (SLR) on fresh FCNR (B) deposits," he said adding that banks expect IFSCA to give a similar treatment.

In August, RBI said advances against fresh Foreign Currency Non-Resident (Bank), or FCNR(B), deposits with a minimum tenure of three years and a maximum tenure of five years, mobilised by banks under the scheme would be excluded from their adjusted net bank credit (ANBC) calculation.

In a statement in September, the finance ministry had noted that the performance of the IBUs under the FCNR(B) swap facility represents a significant demonstration of the ability of GIFT-IFSC to connect IBUs with global sources of foreign currency liquidity and efficiently channel international capital towards India.

Also Read | Banks seek relief from sustainable lending norms for FCNR(B) loans

Earlier, finance minister Nirmala Sitharaman had also asked banks to leverage the financial services ecosystem and institutional infrastructure available at GIFT-IFSC for effective implementation of the RBI's swap facilities for FCNR(B) deposits and External Commercial Borrowings (ECBs).
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( Originally published on Oct 25, 2026 )Read More News onsustainable lending normsFCNR(B) loansInternational Financial Services Centres Authoritybanks relief requestGIFT Cityforeign exchange swap facilityfinance ministryRBI FCNR(B) guidelines

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Read More News onsustainable lending normsFCNR(B) loansInternational Financial Services Centres Authoritybanks relief requestGIFT Cityforeign exchange swap facilityfinance ministryRBI FCNR(B) guidelines

(Catch all the Business News, Breaking News and Latest News Updates on The Economic Times.)

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