MUMBAI: RBI deputy governor Rohit Jain on Thursday said banks are expected to deploy additional liquidity from foreign currency non-resident deposits over the next few months, as credit demand is likely to be strong during the festive season.Under the special Foreign Currency Non-Resident (FCNR-B) deposit scheme, banks have mobilised $133 billion. The scheme closed on Aug 31, one month ahead of the earlier schedule following a robust response from the Indian diaspora.Talking to reporters on the sidelines of the SBI Banking & Economics Conclave here, Jain said RBI has held meetings with banks to discuss their liquidity position following the FCNR(B) inflows. “Banks are expected to deploy FCNR(B) liquidity over the next few months, helped by the upcoming festive season and strong credit demand,” he said, adding that RBI is not directing banks to any particular sector to deploy the mobilised funds. Jain further said banks will have full discretion on deployment of FCNR(B) liquidity, based on their credit pipeline, proposals and liquidity outlook.Banks’ asset-liability position will determine how they use the additional liquidity, he added.Jain said credit demand is broad-based, with all sectors and segments growing reasonably well, and the central bank does not see any particular sector requiring caution at present.
