Reserve Bank of India Covers Hedging Costs to Boost NRI Deposits

The Reserve Bank of India announced it will cover the full hedging costs for banks raising new Foreign Currency Non-Resident (Bank) deposits until September 30, 2026. The central bank aims to revive stalled Non-Resident Indian (NRI) inflows and attract more foreign capital into the country.

A research report from Bank of Baroda noted that total NRI deposits flatlined in FY26 at 166 billion USD. The report suggests the current FCNR(B) initiative could replicate a previous 2013 scheme that drove significant growth between FY13 and FY16. Bank of Baroda predicts that these measures will lead to an 8-10% growth rate in NRI deposits over the next five years.

The analysis also identifies Non-Resident Ordinary (NRO) accounts as the fastest-growing NRI deposit segment, with a compound annual growth rate of 12.1% over five years. This increase is attributed to rising domestic income for NRIs and strengthening confidence in the economic potential of India.