The leverage facility will apply to dollar-denominated deposits of $1 million and above. Under this, for every $1 million deposited in an FCNR(B) account, SBI can extend loans of up to $9 million to customers against the deposit.
For a five-year maturity, the loan rate has been set at 5.4 per cent, while the deposit rate is 6 per cent, translating into a return on investment of 14.08 per cent after factoring in leverage.
For deposits above $1 million, the bank will offer an interest rate of 5.5 per cent for maturities of three years and above but less than four years. For deposits with maturity between four years and less than five years, the rate will be 5.75 per cent.
Earlier this month, the RBI introduced a concessional US dollar-rupee forex swap facility for fresh FCNR(B) deposits mobilised for a minimum tenor of three years and a maximum tenor of five years. The swap facility will remain open until October 16, 2026 for deposits mobilised up to September 30.
The deposits will carry a one-year lock-in period. The RBI will bear the full hedging cost until September 30, 2026. While deposits can be accepted in any freely convertible currency, the RBI’s swap facility will be available only for US dollar deposits.
SBI didn’t respond to an email seeking comment on the development until press time.
Most banks are yet to finalise their leverage structures as they await a frequently asked questions (FAQ) document from the RBI on the special FCNR(B) scheme. “Each bank will decide on its leverage after the FAQ,” said a senior official at a private bank.
The RBI had clarified that provisions under paragraph 402 of its credit facilities directions would not apply to the scheme. “Paragraph 402 states that banks cannot issue a non-fund based facility (guarantee or letter of credit) to any entity assuring redemption. Since this provision is not applicable for FCNR(B), it should enable banks to offer leverage on
these deposits,” said Nomura in a note.
Bankers said a similar leverage structure was offered during the 2013 FCNR(B) scheme. In 2013, during the US Federal Reserve’s “taper tantrum”, several emerging market economies witnessed foreign capital outflows. India responded by launching a similar scheme in September 2013 to attract foreign currency inflows.
“The pickup in overall NRI deposits from $71 billion in FY13 to $127 billion in FY16 was attributable to the increase in FCNR(B) deposits from $15 billion to $45 billion in FY16, following the RBI’s introduction of the swap window,” said Bank of Baroda economist Dipanwita Mazumdar in a note.
FCNR(B) inflows dropped sharply in 2025-26, falling to just $946 million compared with $7.08 billion in the previous financial year. Outstanding FCNR(B) deposits stood at $33.8 billion as of March 31, 2026.
The latest special scheme is expected to boost flows into the deposit category.
“Last time when it happened, India was a very different economy. Indian banks do not have foreign currency debt on their balance sheets to the extent they do now. The banking sector has grown bigger and so have their balance sheets,” said another banker.
On a conservative estimate, the scheme could attract $55 billion in deposits, equivalent to 33 per cent of outstanding NRI deposits and 1.4 per cent of GDP, according to Nomura.
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