India Forecasts Surge in FDI and Bank Deposits for FY27

Indian financial markets are projected to see a significant recovery in fiscal year 2027, characterized by rising foreign investment and strengthened bank deposits. CareEdge Ratings forecasts that net Foreign Direct Investment inflows will more than double from 7 billion USD in FY26 to 15 billion USD in FY27. This rebound is supported by a government shift from blanket restrictions to a threshold-based framework for FDI from land-bordering countries to boost manufacturing.

Simultaneously, SBI Research expects aggregate bank deposit growth to reach 15 percent in FY27, driven by approximately 13-14 billion USD mobilized through Foreign Currency Non-Resident (Bank) deposits. This growth aims to narrow the 5.3 percentage point gap between credit growth and deposits, a disparity caused by urban households diversifying savings into equities and mutual funds.

Brokerage firm Equirus reports that Indian banks enter the second quarter of FY27 with strong capital and asset quality. While most large private banks faced margin declines, ICICI Bank remained a notable exception. Analysts suggest that overall earnings recovery will depend on how individual lenders manage retail loan durability and corporate capital expenditure as the sector moves through a period of strong capital adequacy and low non-performing assets.