Issued by: Reserve Bank of India, Financial Inclusion and Development Department (FIDD) — August 7, 2026
Effective: Immediately (August 7, 2026)
Why RBI Issued This ANBC Exclusion for FCNR(B)/NRE Deposits
This amendment closes the loop on a chain of measures RBI has been rolling out since June 2026 to draw in foreign currency deposits. It started with the Governor's Statement of June 5, 2026, and RBI circular FMOD.MAOG.No.S-56/01.06.016/2026-27 dated June 8, 2026 on 'Swap Facility for FCNR (B) Deposits', which announced a US Dollar-Rupee swap facility for fresh FCNR(B) dollar funds mobilised for a tenor of three to five years.
To sweeten the deal for banks, RBI followed up with CRR and SLR exemptions (via its Second and Third Amendment Directions dated June 8, 2026 and June 19, 2026) on fresh FCNR(B) deposits of three-to-five-year tenor mobilised between June 8 and September 30, 2026, and on fresh NRE term deposits of three years or more mobilised between June 19 and September 30, 2026 — in both cases, deposits renewed on maturity within that window also qualify.
This latest amendment extends that relief into the priority sector lending (PSL) framework: advances a bank extends against these specific deposits will now be excluded when calculating Adjusted Net Bank Credit (ANBC) — the denominator used to measure whether a bank has met its priority sector targets.
What's Excluded from ANBC
- Advances in India against fresh FCNR(B) deposits of minimum 3-year, maximum 5-year tenor, mobilised (including renewals on maturity) between June 8, 2026 and September 30, 2026
- Advances in India against fresh NRE term deposits of 3 years or more, mobilised (including renewals on maturity) between June 19, 2026 and September 30, 2026
The amount excluded from ANBC for priority sector target computation cannot exceed the amount of FCNR(B)/NRE deposits that are themselves eligible for the CRR/SLR exemption under the June 8 and June 19, 2026 Amendment Directions — the two reliefs are capped to move together.
How the PSL Directions, 2025 Are Being Amended
Item VI of the table at paragraph 6.1
This item — which lists categories of advances excluded from ANBC — is being rewritten. The word "incremental" is dropped from the description of qualifying FCNR(B)/NRE deposits, and the item's reference list is updated: the old 2013–14 DBOD circulars and UBD (co-operative bank) circulars that previously anchored this exclusion are removed, and the item now points instead to the RBI (Cash Reserve Ratio and Statutory Liquidity Ratio) Second and Third Amendment Directions dated June 8, 2026 and June 19, 2026.
Footnote 3 — deleted
Footnote 3 previously set out a base-date methodology for computing "incremental advances" — comparing outstanding advances as on March 7, 2014 (June 13, 2014 for UCBs) against a July 26, 2013 base date, with a rule that deduction from ANBC couldn't happen if that difference was zero or negative. With "incremental" now removed from Item VI, this legacy 2014 calculation mechanic is no longer needed and the footnote is deleted in its entirety.
Old vs New — Item VI and Footnote 3
Compliance Checklist
☑ Identify all fresh FCNR(B) deposits of 3–5 year tenor mobilised between June 8, 2026 and September 30, 2026 (including renewals)
☑ Identify all fresh NRE term deposits of 3+ year tenor mobilised between June 19, 2026 and September 30, 2026 (including renewals)
☑ Confirm the corresponding advances against these deposits, and exclude them from ANBC in priority sector target workings
☑ Cross-check that the excluded amount does not exceed the deposit amount eligible for CRR/SLR exemption under the June 8/June 19, 2026 Directions
☑ Update internal PSL computation templates to remove references to the deleted Footnote 3 base-date methodology
☑ Update Item VI documentation/citations to reference the June 8, 2026 and June 19, 2026 CRR/SLR Amendment Directions instead of the 2013–14 circulars
☑ Apply the exclusion with immediate effect in current-quarter priority sector reporting
CorpLawUpdates Analysis
This is a narrow but well-sequenced amendment. RBI built the FCNR(B)/NRE deposit push in layers — swap facility, then CRR/SLR relief, and now an ANBC carve-out — each aimed at making it more attractive for banks to bring in foreign currency and NRE deposits without those funds distorting their priority sector lending arithmetic. Without this ANBC exclusion, a surge in FCNR(B)/NRE-linked advances could have artificially inflated ANBC and made PSL targets harder to hit even as banks did exactly what RBI wanted them to do.
The more interesting move, procedurally, is dropping "incremental" and deleting Footnote 3. That 2013-14-era base-date mechanic was a relic of the original taper-tantrum-era FCNR(B) swap scheme; carrying it forward would have forced banks to run a stale 2014 comparison against a completely different 2026 deposit-mobilisation window. Removing it simplifies compliance meaningfully — this time, the exclusion applies straightforwardly to the defined deposit window without a legacy calculation overlay.
The practical challenge for banks is tracking: identifying which specific advances are funded against which specific FCNR(B)/NRE deposits, within the exact mobilisation windows (June 8–September 30 and June 19–September 30, 2026 respectively), and capping the ANBC exclusion at the CRR/SLR-eligible deposit amount. This needs coordination between treasury (which tracks deposit mobilisation) and the PSL reporting team.
Given the September 30, 2026 sunset built into the underlying CRR/SLR exemptions, expect this window to close on schedule unless RBI extends the swap facility — worth watching for a further circular around that date.
This article is for informational and educational purposes only and does not constitute legal or regulatory advice. Verify with primary regulatory sources before acting.
