RBI permits Indian banks to extend loans against FCNR(B) deposits

The RBI issued a clarification stating that domestic banks can grant loans against FCNR(B) deposits, which are term deposits held in foreign currencies by non‑resident Indians and other foreign nationals. The guidance also allows banks to re‑book these deposits for other RBI‑approved purposes, such as foreign exchange swaps.

Banks will assess the loan‑to‑value ratio and other credit criteria as per existing prudential norms. The facility is expected to be offered on a case‑by‑case basis, with the RBI emphasizing compliance with anti‑money‑laundering and foreign exchange regulations.

For depositors, the policy provides an additional avenue to leverage their overseas assets without liquidating them, while banks gain a new source of secured lending. The development could enhance the depth of the foreign‑currency loan market in India and support broader financial inclusion of the NRI segment.