New Delhi: Banks are expected to deploy additional liquidity raised through foreign-currency non-resident deposits over the next few months, supported by strong festive-season credit demand, Reserve Bank Deputy Governor Rohit Jain said on Thursday.
Speaking to reporters on the sidelines of the 13th SBI Banking & Economics Conclave, Jain said the RBI had discussed banks’ liquidity positions following inflows under the special Foreign Currency Non-Resident (Banks), or FCNR(B), deposit scheme.
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Banks mobilised USD 133 billion under the scheme, prompting the central bank to close the window on August 31, a month ahead of schedule, after its objective was achieved.
Jain said banks would decide how to deploy the funds based on their credit pipelines, lending proposals, liquidity outlook and asset-liability positions. The RBI is not directing the money towards any particular sector.
Credit demand remained broad-based, with sectors and segments growing reasonably well, he said, adding that the central bank did not see any particular sector requiring caution at present.
“Banks are themselves cautious on credit and underwriting, and the RBI expects healthy credit standards to continue,” Jain said.
The RBI launched its special USD-INR forex swap facility on June 8, 2026, covering FCNR(B) deposits, Overseas Foreign Currency Borrowings (OFCBs) and External Commercial Borrowings (ECBs).
While the FCNR(B) window has closed, the ECB and OFCB windows remain open until December 31, 2026. Total inflows across the three channels stood at USD 143.596 billion as of September 18, according to data reported by authorised dealer banks.
FCNR(B) deposits allow non-resident Indians to hold fixed-term deposits with Indian banks in foreign currencies. Principal and interest are repaid in the same currency, shielding depositors from direct rupee exchange-rate risk.
During a panel discussion, Jain said India had become the world’s fifth-largest holder of foreign exchange reserves. The reserves are managed with safety, liquidity and returns as the principal considerations, and diversified across geographies, currencies and asset classes.
The objective is to strengthen external resilience and maintain the confidence of foreign investors and counterparties, he said.
Jain also flagged weak secondary-market liquidity and fragmentation in the state government securities market. The RBI is encouraging states to reissue existing securities and adopt a benchmark issuance strategy similar to the Centre’s to improve trading activity.
On tokenisation, he said the technology offered opportunities for digital ownership records, automated settlements and operational efficiencies, but adequate safeguards were needed before wider adoption.
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Earlier, addressing the conclave, Jain urged banks to treat technology architecture risk as a core enterprise risk, comparable to traditional balance-sheet risks.
Technology has expanded banking access, lowered transaction costs and enabled round-the-clock services, he said. However, its integration into core banking, payments, customer onboarding, credit assessment and fraud monitoring means failures can disrupt essential financial services.
“It can no longer be viewed as a back-office or purely technical concern, to be managed exclusively by the IT department,” Jain said.
Cybersecurity risks also extend beyond protecting an institution’s external systems, he added. Ransomware can disrupt critical services, while compromised credentials can expose sensitive applications.
Jain said sound technology governance requires banks to identify vulnerabilities early, limit disruptions, protect customers and restore critical services. This calls for strong oversight, skilled personnel, resilient systems and shared responsibility for technology risk.
As banks adopt artificial intelligence, governance must support innovation while preserving the financial system’s resilience and trustworthiness, he said.
The source does not specify the event’s city, so the dateline remains unconfirmed.
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