Industry Odisha Bureau, Oct 26: Lenders ask IFSCA to exclude FCNR(B)-backed loans from GIFT City’s sustainable lending norms. Banks are seeking regulatory relief over sustainable lending targets at GIFT City. They want the International Financial Services Centres Authority (IFSCA) to change a key calculation. The request covers loans by international banking units (IBUs) against FCNR(B) deposits. These Foreign Currency Non-Resident (Bank) deposits are foreign currency accounts held by non-residents.
No exemption has been granted. Some banks have held informal talks with IFSCA, according to The Economic Times. A formal request will follow internal consultations, a bank executive said anonymously.
Current rules require each IBU to meet a sustainable finance minimum. It must deploy at least 5% of the previous year’s loans disbursed and specified investments. That money must go towards sustainable lending and investments. The obligation therefore grows as an IBU’s overall lending expands. Excluding FCNR(B)-backed loans would shrink the base on which the 5% is calculated.
The Reserve Bank of India (RBI) launched a special foreign exchange swap facility in June. A swap involves exchanging currencies now and reversing the trade at a later date. FCNR(B) mobilisation through GIFT City rose steeply after the facility opened.
By August 31, IFSCA data show, 20 IBUs had sanctioned $54.02 billion under the facility. Of that, $52.82 billion had been disbursed. Banks mobilised $127.2 billion in FCNR(B) deposits overall, the report’s infographic showed. Separately, $11.62 billion in External Commercial Borrowings (ECBs) was disbursed between April and August. These figures cover different categories and cannot be added together.
For lenders, the jump creates a compliance problem. Higher disbursements this year mean a larger sustainable deployment target next year. Another executive said lenders cannot easily place such large sums. He suggested a special carve-out, citing limited investment avenues in the sustainable segment. These remain the views of banks, not the regulator.
The infographic puts banks’ total sustainable credit at $6.25 billion. Green financing reached $2.92 billion in FY26, and social financing $2.22 billion. That reported activity is separate from the regulatory minimum each IBU must meet.
Banks are pointing to the RBI as precedent. The central bank has eased rules on fresh FCNR(B) deposits under the scheme. These cover the cash reserve ratio (CRR) and statutory liquidity ratio (SLR). In August, it also excluded qualifying advances from adjusted net bank credit (ANBC). Such advances must be against deposits of three to five years’ tenure. Since ANBC underpins priority sector lending (PSL) targets, this eased PSL obligations. Those are RBI measures, however, while sustainable lending targets fall under IFSCA. RBI relief does not automatically extend to IFSCA rules.
The finance ministry said in September that IBU performance under the facility was significant. It said GIFT-IFSC had shown it can connect IBUs with global foreign currency liquidity. Finance minister Nirmala Sitharaman had earlier urged banks to use GIFT-IFSC for the swap facilities.
The decision now rests with IFSCA. Until it rules, this year’s FCNR(B) surge feeds directly into next year’s target.
