India's Central Bank Attracts $17.4 Billion in Forex Deposits to Support the Rupee

Mumbai | EcoPulse24

India's central bank has attracted $17.4 billion in foreign currency deposits from non-resident Indians through a special deposit program designed to strengthen overseas capital inflows and support the rupee.

The Reserve Bank of India (RBI) said Monday that the scheme had attracted $17.4 billion in deposits through last Friday, benefiting from measures that gave banks greater flexibility to offer more competitive rates on foreign currency deposits while the central bank absorbed the full hedging costs.

Companies Raise Additional Overseas Funding

Alongside the deposit program, Indian companies raised $1.34 billion through External Commercial Borrowings (ECBs), while overseas foreign-currency borrowings generated an additional $1.97 billion, according to the RBI.

The figures highlight growing access to international funding as policymakers work to attract foreign capital into the Indian economy.

Capital Inflows Aim to Support the Rupee

The initiatives form part of a broader strategy to strengthen India's external financial position and support the Indian rupee, which has remained near record lows despite repeated policy measures, as elevated oil prices continue to pressure the country's balance of payments.

The RBI said the foreign currency deposit program has attracted steady inflows since its launch, supported by a concessional swap facility that reduces hedging costs for participating banks and borrowers, making overseas fundraising more attractive.

Economists Expect Stronger Inflows

Gaura Sen Gupta, Chief Economist at IDFC First Bank, described the initial response as a strong start for the capital inflow initiative, saying the pace of deposits could push total FCNR(B) inflows to around $50 billion during the program.

Meanwhile, Madhavi Arora, Lead Economist at Emkay Global, expects combined inflows from the foreign currency deposit scheme and external borrowing programs to reach $60 – 75 billion over the designated window, saying the latest data effectively dispel concerns about weak participation in the FCNR(B) program.

Program Remains Open Through Year-End

According to the RBI, the special window for fresh Foreign Currency Non-Resident (Bank) [FCNR(B)] deposits will remain open until September 30, 2026, while facilities covering External Commercial Borrowings (ECBs) and overseas foreign currency borrowings will continue until December 31, 2026.

Key Figures

EcoPulse24 Analysis

The early success of the RBI's foreign currency deposit program suggests India's latest efforts to attract overseas capital are gaining traction at a time when the rupee remains under pressure from elevated energy import costs and external financing needs.

By subsidizing hedging costs and offering banks greater flexibility to attract foreign currency deposits, the central bank is encouraging stable, medium-term capital inflows rather than relying solely on direct intervention in the foreign exchange market.

If current momentum continues, the program could provide meaningful support to India's foreign exchange reserves and balance of payments while helping stabilize the rupee amid ongoing global financial uncertainty.