India’s latest foreign capital drive has already brought in nearly $32 billion, with FCNR(B) deposits emerging as the main engine behind the inflows. The pace is notable: the amount has already crossed the 2013 record of $26 billion in just about 45 days, even as the rupee still trades near record lows and the RBI watches for signs of deposit recirculation.
The Reserve Bank of India’s June 5 measures were designed to pull in foreign currency, support the balance of payments, cushion rupee weakness and ease imported inflation. According to RBI Governor Sanjay Malhotra, banks have mobilised almost $32 billion so far, with “most of it” coming through FCNR(B) deposits; he also said there is no prima facie evidence that existing deposits are being rotated just to exploit higher returns.
FCNR(B), or Foreign Currency Non-Resident Bank deposits, are attractive because they let NRIs park money in foreign currency while earning interest that has become more competitive under the special RBI window. The current scheme has a shorter deadline for FCNR(B) deposits, open until September 30, while the windows for external commercial borrowings and overseas foreign currency borrowings remain open until December 31.
The scale of the response suggests that the RBI’s approach has worked better than many expected. A State Bank of India report cited in the story projects FCNR(B) mobilisation could reach $65–70 billion under the scheme, while total inflows from FCNR(B), OFCB and ECB routes may rise to $80–85 billion if momentum continues.
That projection matters because the rupee has not yet reflected the strength of the inflows. Despite the capital coming in, the currency has remained weak, which points to persistent dollar demand in the system and heavier outflows in other channels.
One reason is that foreign exchange markets are being pulled in opposite directions at the same time. On one side, special deposit schemes and foreign borrowing windows are bringing in dollars; on the other, import bills, energy costs and weak hedging activity among exporters continue to drain dollar supply.
It also highlights that public sector banks have played a central role in the mobilisation drive, using their client relationships and balance-sheet strength to expand incremental inflows. This is important because the success of such schemes often depends not only on rates, but also on how quickly banks can package the offer for NRIs and channel it through trusted networks.
Still, the RBI is being careful not to treat the inflow surge as a complete solution. The central bank is monitoring whether the higher returns are encouraging any artificial recycling of deposits, but for now it does not see that as a major concern.
The bigger policy question is whether this burst of inflows can translate into lasting stability for the currency. For now, the answer appears to be partial: the RBI has clearly succeeded in drawing foreign capital at scale, but the broader external pressure on the rupee remains strong enough to keep exchange-rate gains limited.
