What changed
Previously, all FCNR(B) and NRE deposit liabilities were included in NDTL for CRR/SLR. Now, incremental FCNR(B) and NRE term deposits over the July 1, 2022 base are exempt from CRR/SLR maintenance. The exemption applies from the fortnight starting July 30, 2022, for deposits raised until November 4, 2022.
What it means for you
Banks can now raise fresh FCNR(B) and NRE term deposits without setting aside CRR/SLR reserves, freeing up funds for lending or investment. This reduces the cost of these deposits and may encourage banks to offer competitive rates to attract non-resident inflows. However, NRO-to-NRE transfers are excluded, so banks must track deposit sources carefully.
What you must do
- Set July 1, 2022 as base date for FCNR(B) and NRE term deposit balances to calculate incremental amounts.
- Exclude incremental FCNR(B) and NRE term deposits from NDTL for CRR/SLR from the fortnight beginning July 30, 2022.
- Ensure NRO-to-NRE transfers are not treated as exempt deposits; include them in NDTL as usual.
- Monitor deposit mobilisation deadlines: only deposits raised up to November 4, 2022 qualify for the exemption.
- Maintain records to track exempt deposits until they are repaid or removed from books.
Who it affects
All Scheduled Commercial Banks (including RRBs), Local Area Banks, Small Finance Banks, Payments Banks, Primary (Urban) Co-operative Banks, State and Central Co-operative Banks
What is the base date for calculating incremental deposits?
The base date is July 1, 2022. Any FCNR(B) or NRE term deposit balance above that date's level qualifies for CRR/SLR exemption.
Does the exemption apply to NRO account transfers to NRE accounts?
No, transfers from Non-Resident (Ordinary) accounts to NRE accounts do not qualify for the exemption and must be included in NDTL for CRR/SLR.
How long does the CRR/SLR exemption last for a qualifying deposit?
The exemption applies for the entire period the original deposit remains in the bank's books, provided the deposit was raised on or before November 4, 2022.