RBI May Reintroduce FCNR(B) Deposits To Support Rupee Amid Volatility

It is expected that in its upcoming monetary policy meet on April 8, RBI will reintroduce the Foreign Currency Non-Resident (Bank) [FCNR(B)] deposit channel in order to bring in foreign currency deposits and help the rupee, said Moneycontrol.

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This decision is made due to a sharp decline in NRI deposits in the recent period. According to data provided by Macquarie Capital, citing RBI stats, the aggregate NRI deposits decreased by 26% to $14.35 billion for the period April 2025 - January 2026. Out of these, the FCNR(B) deposits reduced to $0.94 billion against $7.02 billion last year.

Decline In NRI Deposits Triggers Policy Consideration

FCNR(B) deposits could be introduced again to stop the outflow and ensure the availability of foreign exchange. As per reports from Moneycontrol, almost 40% of FCNR(B) deposits of Indian banks come from the United Arab Emirates.

The rupee has depreciated by almost 3% from late February 2026 due to international problems and the rise in crude oil prices. During the entire fiscal year 2025-26, the rupee depreciated by almost 10%. This can be said to be one of the worst depreciations of the rupee in a decade.

Past Precedent From 2013

The FCNR(B) route was last used in 2013 during the taper tantrum period, when the RBI introduced a special swap window to attract dollar deposits. Banks were allowed to swap deposits with a maturity of three years or more at a concessional rate of 3.5%.

This measure resulted in inflows of nearly $30 billion, according to RBI data, and helped stabilise the rupee during a period of volatility. A similar approach is now being considered as external pressures intensify.

Focus On Currency Stability Measures

Measures have been taken by the RBI to mitigate the problem of volatility, such as tightening the laws of offshore non-deliverable forward (NDF) markets. Nevertheless, as stated by Moneycontrol, there is an expectation for further measures to be taken in order to aid the currency if the pressure continues.

Economic experts consulted by Moneycontrol suggested that bringing foreign investments could balance the effects of increasing prices of oil imports and global uncertainties. Furthermore, the policy announcement on April 8 would include news about liquidity, inflation, and economic forecasts.

The inclusion of FCNR(B) deposits demonstrates how the RBI is working to ensure the stability of the currency despite the decreasing foreign flows.