Amid heightened geopolitical tensions, energy-market uncertainty and concerns over global economic stability, overseas Indians have emerged as an important source of foreign currency for India. Their strong response to a special Reserve Bank of India (RBI) initiative has significantly strengthened the country’s foreign exchange reserves.
The RBI launched a special Foreign Currency Non-Resident (Bank) deposit scheme on June 8 to encourage overseas Indians to bring foreign currency into the Indian banking system. Under the initiative, non-resident customers could deposit foreign currency and earn returns in the same currency, making the scheme attractive at a time of global financial uncertainty.
The central bank also encouraged Indian companies investing overseas to raise loans in foreign currencies from the countries where they operate. In addition, easier access to dollar-denominated external commercial borrowings was introduced as part of the broader strategy.
The government had described the measures as a way to create a temporary “buffer” for India’s foreign exchange position. The response, however, exceeded expectations. Within just two months, deposits under the scheme reportedly reached around $13.6 billion, with nearly 93 per cent coming from non-resident Indians.
NRI deposits alone accounted for approximately $12.7 billion, providing a substantial boost to India’s foreign currency resources. The overwhelming response also prompted the RBI to close the scheme earlier than initially planned. It was originally scheduled to remain open until September 30 but was withdrawn at the end of August following the surge in deposits.
Officials view the development as evidence of continued confidence among overseas Indians in India’s economic prospects. The RBI had introduced a similar initiative in 2013, when it raised around $2.6 billion over three months.
