RBI Attracts $32 Billion in Foreign Currency Deposits

The Reserve Bank of India has mobilized nearly $32 billion through Foreign Currency Non-Resident Bank (FCNR(B)) deposits and over $7 billion in government securities since June. Governor Sanjay Malhotra defended the measures against risk concerns, stating that the central bank utilizes a foolproof system by investing excess foreign currency into overseas assets to eliminate risk.

SBI Research reports that FCNR(B) deposits likely surpassed the 2013 record of $26 billion within just 45 days, driven largely by public sector banks and the renewal of maturing deposits. The research firm projects that FCNR(B) deposits could reach $65-70 billion by the end of the scheme on September 30, 2026, with total inflows including external borrowings potentially hitting $85 billion.

While Governor Malhotra characterized the Indian rupee as undervalued and attributed its depreciation to dollar strength and geopolitical tensions, SBI Research offered a more critical view. The firm argued that the central bank's foreign exchange market interventions have been sporadic and insufficient since disturbances began in West Asia. Meanwhile, Malhotra reaffirmed that the Monetary Policy Committee maintains a neutral stance, prioritizing inflation and price stability as its primary mandate.