New Delhi, July 10 (IANS) Finance Minister Nirmala Sitharaman is scheduled to meet heads of public sector banks (PSBs) and financial institutions on Monday to review the progress of foreign currency deposit mobilisation and overseas borrowing initiatives aimed at strengthening external capital inflows, as per sources.

The meeting comes after the Reserve Bank of India (RBI) last month announced a series of measures to encourage banks to mobilise foreign currency deposits from Non-Resident Indians (NRIs), Overseas Citizens of India (OCIs) and Persons of Indian Origin (PIOs).

FM Sitharaman will review the mobilisation of Foreign Currency Non-Resident (Bank) or FCNR(B) deposits, overseas foreign currency bonds and external commercial borrowings (ECBs) by public sector banks and financial institutions, including IDBI Bank.

Until September 30, the central bank had withdrawn the interest rate ceiling on fresh FCNR(B) deposits with maturities of three to five years to help banks attract higher foreign currency deposits.

In addition, the RBI has introduced a concessional foreign exchange swap facility for FCNR(B) deposits of three to five years, reducing the cost of hedging foreign currency exposure for banks.

Moreover, the central bank announced a similar concessional forex swap facility to encourage public sector undertakings (PSUs) to raise funds through External Commercial Borrowings until September 30.

Following this, banks have registered a gradual increase in the flow of overseas funds and expect collections to accelerate further this month as awareness among NRIs is growing.

NDTV Profit reported that the industry has mobilised an estimated $3-4 billion through FCNR-B deposits as of July 3.

Bankers expect inflows to gather pace in the coming weeks, particularly from non-resident Indians based in the Gulf region, the report added.

Additionally, the revised scheme is expected to attract $40-50 billion in fresh FCNR-B deposits over time, according to bankers.

–IANS

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