The Reserve Bank of India has eased how banks calculate their mandatory priority-sector lending targets, offering a significant incentive for them to attract fresh long-term deposits from non-resident Indians (NRIs). Under the new circular, loans made in India against a defined set of NRI deposits will be excluded from the Adjusted Net Bank Credit (ANBC) calculation, which forms the basis for determining a bank's priority-sector lending obligations.

The Reserve Bank of India has eased how banks calculate their mandatory priority-sector lending targets, offering a significant incentive for them to attract fresh long-term deposits from non-resident Indians (NRIs). Under the new circular, loans made in India against a defined set of NRI deposits will be excluded from the Adjusted Net Bank Credit (ANBC) calculation, which forms the basis for determining a bank's priority-sector lending obligations.

The Reserve Bank of India has eased how banks calculate their mandatory priority-sector lending targets, offering a significant incentive for them to attract fresh long-term deposits from non-resident Indians (NRIs). Under the new circular, loans made in India against a defined set of NRI deposits will be excluded from the Adjusted Net Bank Credit (ANBC) calculation, which forms the basis for determining a bank's priority-sector lending obligations.

The Reserve Bank of India eased how banks calculate their mandatory priority‑sector lending targets, giving them an additional incentive to bring in fresh long‑term deposits from non‑resident Indians.

In a circular issued on Friday, the apex bank said loans made in India against a specific set of NRI deposits will be excluded from the Adjusted Net Bank Credit (ANBC) base that is used to fix each bank’s priority‑sector obligation.

The relief applies to advances backed by new Foreign Currency Non‑Resident (Bank), or FCNR(B), dollar deposits of three to five years’ maturity raised between June 8 and September 30, 2026, and to loans against fresh Non‑Resident (External) rupee term deposits of three years or more raised between June 19 and September 30, 2026.

These deposits already enjoy two benefits announced in June: exemption from cash reserve ratio and statutory liquidity ratio requirements, and access to a special dollar–rupee swap window.

By also allowing related advances to be kept out of the priority‑sector base, RBI is ensuring that banks are not penalised with higher rural and small‑business lending targets merely because they have mobilised more stable foreign and NRI rupee money.

Technically, the change amends the Reserve Bank of India (Priority Sector Lending – Targets and Classification) Directions, 2025, updating the clause that lists items to be excluded from ANBC and deleting an older footnote that described a now‑defunct 2013–14 FCNR(B)/NRE incentive scheme.

A cap has been added to ensure that the amount excluded from ANBC cannot exceed the size of deposits actually eligible for CRR/SLR exemption.

Many see this as part of RBI’s broader effort to shore up foreign‑currency buffers and encourage longer‑tenor NRI deposits without diluting the overall framework for priority‑sector credit. And for most banks, this move is expected to slightly ease the pressure of meeting percentage‑based lending targets while they chase fresh offshore funds in the coming quarter.

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