New Delhi, June 22 -- Amid sharp foreign investment outflows and prolonged weakness in the rupee, the Reserve Bank of India (RBI) has revived an old playbook: opening the taps on foreign currency deposits from non-resident Indians (NRIs).

In the past, such deposits, offered in select foreign currencies at interest rates well above standard benchmarks, have triggered sizable inflows into Indian banks. The central bank is now betting that a fresh wave of short-term foreign currency inflows will give it room to slow the rupee's slide. But while the strategy is attractive for NRIs, it carries broader macroeconomic risks by adding to India's external debt.

As of March, total NRI deposits in Indian banks stood at around $165 billion. Of this,...