RBI Schemes Attract $40.81 Billion in Forex Inflows, FCNR(B) Deposits Lead

The Reserve Bank of India (RBI)'s special schemes to draw foreign exchange into the country have resulted in total dollar inflows of $40.81 billion upto July 31, the central bank said in an update on its website.

Foreign currency non convertible rupee bank FCNR (B) deposits make up a majority of these inflows at around $36.72 billion, surpassing the 2013 level of $26 billion in less than two months since the scheme was operationalised on June 8.

Banks are permitted to swap these deposits with the central bank under a zero-cost hedging facility open until the end of September.

The total FCNR (B) deposit inflows have increased 77% from the $20.72 billion recorded in the last RBI data released until July 17. However, inflows from swap facilities for external commercial borrwings (ECBs) and overseas foreign currency borrowings (OFCBs) have not increased as sharply.

ECBs have risen to $1.51 billion from the last reported $1.34 billion and OFCBs have increased to $2.57 billion from the $1.34 billion reported on July 17. Banks can raise ECBs and OFCBs till the end of the year.

In a report last month SBI research had said India may receive FCNR (B) deposits in the range of $65 to $70 billion by the end of the scheme on September 30.

Inflows including ECB and OFCBs will total to about $80 billion to $85 billion the research report had said.

SBI Research had revised its total FCNR forecast at the end of the scheme upward to $65 to $70 billion from an earlier estimate of $40 to $45 billion.

The SBI report noted that a significant majority of existing FCNR deposits maturing in August-September 2026 are expected to be renewed under the new scheme, drawn by the higher interest rates which will further boost FCNR(B) inflows.

In June, Goldman Sachs economists Arjun Varma and Santanu Sengupta had forecasted that the RBI measures could help in driving $60 billion of additional capital inflows taking the balance of payments to a surplus of around 0.6% in the current financial year.

Nitin Aggarwal of Motilal Oswal Financial Services had predected additional forex inflows of $40-50 billion in the year ending March 2027 due to the RBI measures.