In June, a sharp decline in the rupee prompted India's central bank to incentivize local lenders to attract foreign-currency deposits from overseas Indians. The strategy aims to draw in billions of dollars to stabilize the currency. The Reserve Bank of India last deployed a similar approach during the 2013 "taper tantrum," when banks mobilized about $26 billion, helping limit the hit to foreign reserves.

Many overseas Indians maintain strong financial ties with their homeland, holding bank deposits and investing in Indian assets. The current move leverages the Foreign Currency Non-Resident (FCNR) deposit framework to bolster liquidity and defend the rupee against external pressures.