By continuing, you agree to LoansJagat's Credit Report Terms of Use, Terms and Conditions, Privacy Policy, and authorize contact via Call, SMS, Email, or WhatsApp
Disclaimer: The information published on LoansJagat is intended for general informational and educational purposes only and should not be considered financial, legal, or investment advice. Interest rates, loan terms, statistics, and other data may change over time and may vary by lender or source. Please verify the latest information and consult a qualified financial advisor or the respective Bank/NBFC before making any financial decisions.
Subscribe Now
About the author
Arshathul Afia
Arshathul Afia is a journalism graduate and fintech content writer with 4+ years of experience in digital publishing and research-led writing. She has written 200+ articles covering personal finance, lending, banking, digital payments, credit, insurance, and major financial developments in India. At LoansJagat, she focuses on simplifying complex fintech news, RBI updates, loan-related changes, policy developments, and industry trends for everyday readers. Her journalism background helps her approach stories with research, context, and clarity, while her SEO experience ensures content remains discoverable and relevant. She aims to make financial news easier to understand, practical, and useful for readers across India.
Related News
Simplify All Your Loans Into One Affordable EMI
Customers Served
Debt Consolidated
1200+ Reviews
Locations in India
Club all Loans & Credit Card Bills into Single EMI
Quick Apply Loan
Consolidate your debts into one easy EMI.
Takes less than 2 minutes. No paperwork.
10 Lakhs+
Trusted Customers
2000 Cr+
Loans Disbursed
4.7/5
Google Reviews
50+
Banks & NBFCs Offers
Other services mentioned in this article
RBI has reportedly warned banks against relaxing loan checks after foreign deposits brought in more funds, concerned that rushed lending could cause repayment problems later.
The Reserve Bank of India has reportedly warned banks against easing credit checks to deploy surplus funds. A 23 September 2026 account of the bankers’ meeting, citing a participant, said Jain raised concerns about aggressive lending. Banks had exchanged foreign-currency deposits for rupees, increasing available funding. The concern was that weaker lending decisions could create repayment problems later.
Banks have additional funds to support lending, but applicants still face checks on income, existing debt and repayment history. Underwriting is the process of assessing whether a borrower can repay and deciding suitable loan terms. A bank’s funding position and an applicant’s ability to repay answer different questions. More available cash does not improve a borrower’s income or reduce existing obligations.
The borrower-focused view in LoansJagat separates liquidity operations from changes to loan contracts. Applied here, the useful distinction is between banks having funds and banks approving an application. Borrowers comparing offers should examine the repayment amount, tenure and total cost together. A smaller monthly instalment spread over a longer period does not, by itself, establish that a loan costs less.
Jain addressed the issue publicly while speaking to reporters at the SBI Banking & Economics Conclave in Mumbai on 24 September 2026. He said, "Banks are themselves cautious on credit and underwriting, and the RBI expects healthy credit standards to continue.”
According to Jain, banks would decide how to deploy the funds based on their credit pipeline, proposals, liquidity outlook and asset-liability position. He expected deployment over the coming months, supported by festive-season demand. RBI was not directing banks towards a particular sector. The approach leaves lenders responsible for selecting borrowers and matching lending decisions with their funding obligations.
FCNR(B) stands for Foreign Currency Non-Resident (Bank). These deposits allow non-resident Indians to hold funds with Indian banks in foreign currencies. Through the special swap arrangement, banks exchanged foreign currency with the RBI for rupees. The rupee leg of the transaction added domestic funding.
The 22 September 2026 government news update recorded inflows through 18 September 2026. Deposits supplied most of the money, while overseas borrowing channels contributed the remainder.
The larger figure includes external commercial borrowings and overseas foreign-currency borrowings. It is not the FCNR(B) deposit total. Neither figure measures how much banks have subsequently lent to households or businesses.
The deposit window had already closed when the lending warning came. Banks could use the special dollar-rupee swap facility for FCNR(B) deposits from 8 June 2026 until 31 August 2026. External commercial borrowings and overseas foreign-currency borrowings had a later deadline: 31 December 2026, as recorded in the 22 September update.
Before this, RBI had tried to attract foreign deposits by allowing banks to offer higher interest rates. It raised the ceilings on fresh FCNR(B) deposits on 6 December 2024. Banks could use that temporary relaxation until 31 March 2025. The 2026 swap facility followed as a separate measure.
By September 2026, attention had turned to managing the resulting surplus. In remarks reported on 12 September 2026, Governor Sanjay Malhotra said RBI had sufficient tools to manage liquidity and was prepared to use them. He identified currency circulation, foreign-exchange intervention and banks’ reserve requirements as channels through which some surplus funds would be withdrawn over time.
The borrower-side analysis is straightforward: funding gives banks the capacity to lend, while underwriting determines whether a particular loan is suitable. Judging the FCNR(B) inflows only by the amount raised misses the second decision.
Jain’s comments place that decision with individual banks. Lenders must assess proposals and their own balance sheets together. A larger funding pool does not remove the need to check repayment capacity, and a competitive interest rate still needs to reflect the borrower’s risk.
RBI’s reported warning asks banks to preserve loan quality while deploying additional funds. Jain’s subsequent remarks support lending based on credit demand and sound assessment. For borrowers, the important difference stays the same: money that banks have available helps them lend more and each person's income, debts and how they paid back loans before affect whether they get a loan.
The Reserve Bank of India has warned banks not to lower their lending standards simply to make use of funds. A banker who attended a meeting in Mumbai on September 22, 2026, said the RBI had cautioned against a loan price war. This information was reported on September 23, 2026.
An FCNR(B) deposit holds an eligible non-resident customer’s funds in foreign currency with an Indian bank. The deposit differs from an ordinary rupee deposit. Under the special facility, banks could swap foreign-currency funds with RBI for rupees.
Individual banks decide, according to Jain’s 24 September 2026 remarks. Their credit proposals, liquidity outlook and asset-liability position guide deployment. Jain said RBI was not directing the funds towards a particular sector.
A credit score is part of an assessment. Income, existing repayments and the lender’s eligibility requirements also affect approval. The post alone cannot establish why that application failed.
Applicants can ask lenders about products available to customers without an established credit history. Eligibility remains product-specific; taking an unnecessary loan solely to obtain a score adds a repayment obligation.
.png&w=3840&q=75)
