look news india
The Central Government has once again intensified its efforts towards further strengthening the country’s foreign exchange reserves and financial stability. Finance Minister Nirmala Sitharaman will chair a high-level review meeting with top executives and managing directors of all major public sector banks (PSBs) of the country on Monday. The main agenda of this important meeting is to take stock of the progress so far of the special campaign being run to attract foreign currency deposits in the country through Non-Resident Indians (NRIs) and Overseas Citizens of India (OCI).
Heavy decline in foreign exchange inflow becomes main cause for concern
This high-level review meeting has been called at a sensitive time when there has been a significant decline in the net inflow of foreign currency deposits in the country. According to the data available on the financial front, the foreign exchange reserves which used to be around $7.1 billion during the financial year 2024-25, have declined to just $946 million in the financial year 2025-26. To deal with this huge decline and maintain liquidity in the banking system, both the government and the Reserve Bank have started taking strategic steps.
RBI removed interest rate limit and gave swap facility
Realizing the seriousness of the situation, the Reserve Bank of India (RBI) has also taken a big step. The central bank has completely removed the upper limit of interest rates on new foreign currency deposits coming from NRI and OCI category till September 30, so that banks can attract investors by offering higher interest. Along with this, under the new and flexible arrangement, RBI is also providing concessional FX Swap facility to banks for foreign currency deposits with maturity period of three to five years, which will significantly reduce the cost of hedging currency risk for banks.
Emphasis on raising ECB for PSU and CPSE companies
During the meeting, special discussion will be held not only on deposit campaigns but also on the process of raising commercial loans from abroad by government companies. RBI has announced special incentives for Central Public Sector Enterprises (CPSEs) and other government companies to raise funds through External Commercial Borrowings (ECB) till September 30, 2026. Generally, these government enterprises bring in about $10-12 billion of foreign capital annually through the ECB, and the purpose of this entire campaign is to further strengthen the foreign exchange structure of the country.