The $70-billion NRI bet: Can FCNR(B) deposits buy India enough time to defend the rupee?
SBI Research estimates that FCNR(B) deposits could reach $65-70 billion under the RBI's special mobilisation scheme, providing a major boost to India's external finances. But despite record NRI inflows, the report warns that sustained rupee depreciation remains a concern and calls for stronger forex intervention by the central bank.
- Jul 27, 2026,
- Updated Jul 27, 2026 8:45 AM IST
The Reserve Bank of India's (RBI) latest push to attract Foreign Currency Non-Resident (Bank), or FCNR(B), deposits has brought the little-known investment option back into focus.
The move follows a sharp decline in FCNR(B) inflows — from over $7 billion in FY25 to just $946 million in FY26. To reverse the trend, the RBI introduced a special concessional swap facility, encouraging banks to mobilise fresh FCNR(B) deposits with maturities of three to five years.
According to SBI Research's latest Ecowrap report, the strategy is already showing results. It estimates FCNR(B) deposits have crossed the 2013 mobilisation level of $26 billion in just around 45 days, making it one of the fastest foreign currency deposit drives in India's history.
SBI Research has also raised its estimate for total FCNR(B) mobilisation to $65-70 billion by the end of the scheme, up from an earlier projection of $40-45 billion. Including Overseas Foreign Currency Borrowings (OFCBs) and External Commercial Borrowings (ECBs), overall inflows could reach $80-85 billion.
Strong response from NRIs
RBI data showed banks mobilised $20.72 billion under the special measures until July 17, including $17.41 billion through FCNR(B) deposits. SBI believes the figure has already crossed $26 billion, led largely by public sector banks and supported by strong NRI participation.
The report also expects a significant share of FCNR(B) deposits maturing in August and September to be renewed under the higher interest-rate regime, further boosting inflows.
Separately, RBI Governor Sanjay Malhotra told The Hindu BusinessLine that banks have mobilised nearly $32 billion, primarily through FCNR(B) deposits, while foreign investors have invested over $7 billion in government securities since the June measures. He said these inflows would strengthen India's balance of payments and support currency stability.
Why the rupee remains under pressure
Despite the surge in inflows, the rupee has continued to weaken. SBI Research says part of the disconnect is due to an accounting lag. Banks first mobilise FCNR(B) deposits and then swap them with the RBI for rupee liquidity, meaning the increase in Foreign Currency Assets (FCA) is reflected gradually rather than immediately.
The report also points to global factors such as geopolitical tensions, volatile energy prices and cautious foreign portfolio flows. Even so, it notes the rupee has depreciated about 12.5% since April 2025, despite healthy capital inflows.
SBI Research calls for stronger forex intervention
SBI Research argues that RBI's intervention in the foreign exchange market has been too limited. Using a Censored Tobit model, it estimates the central bank has intervened by an average of $14 million a day, which it believes is insufficient to curb volatility or arrest depreciation.
The report contrasts this with the 1997-98 period under former RBI Governor Bimal Jalan, when average intervention was around $55 million a day, helping stabilise the rupee despite much smaller forex reserves.
SBI Research projects India's balance of payments will post a surplus of more than $50 billion in FY27, supported by FCNR(B) deposits, remittances, FDI and portfolio inflows. However, it cautions that allowing the rupee to keep weakening despite strong inflows could trigger a self-reinforcing cycle of depreciation after the FCNR(B) mobilisation window closes on September 30.
The Reserve Bank of India's (RBI) latest push to attract Foreign Currency Non-Resident (Bank), or FCNR(B), deposits has brought the little-known investment option back into focus.
The move follows a sharp decline in FCNR(B) inflows — from over $7 billion in FY25 to just $946 million in FY26. To reverse the trend, the RBI introduced a special concessional swap facility, encouraging banks to mobilise fresh FCNR(B) deposits with maturities of three to five years.
According to SBI Research's latest Ecowrap report, the strategy is already showing results. It estimates FCNR(B) deposits have crossed the 2013 mobilisation level of $26 billion in just around 45 days, making it one of the fastest foreign currency deposit drives in India's history.
SBI Research has also raised its estimate for total FCNR(B) mobilisation to $65-70 billion by the end of the scheme, up from an earlier projection of $40-45 billion. Including Overseas Foreign Currency Borrowings (OFCBs) and External Commercial Borrowings (ECBs), overall inflows could reach $80-85 billion.
Strong response from NRIs
RBI data showed banks mobilised $20.72 billion under the special measures until July 17, including $17.41 billion through FCNR(B) deposits. SBI believes the figure has already crossed $26 billion, led largely by public sector banks and supported by strong NRI participation.
The report also expects a significant share of FCNR(B) deposits maturing in August and September to be renewed under the higher interest-rate regime, further boosting inflows.
Separately, RBI Governor Sanjay Malhotra told The Hindu BusinessLine that banks have mobilised nearly $32 billion, primarily through FCNR(B) deposits, while foreign investors have invested over $7 billion in government securities since the June measures. He said these inflows would strengthen India's balance of payments and support currency stability.
Why the rupee remains under pressure
Despite the surge in inflows, the rupee has continued to weaken. SBI Research says part of the disconnect is due to an accounting lag. Banks first mobilise FCNR(B) deposits and then swap them with the RBI for rupee liquidity, meaning the increase in Foreign Currency Assets (FCA) is reflected gradually rather than immediately.
The report also points to global factors such as geopolitical tensions, volatile energy prices and cautious foreign portfolio flows. Even so, it notes the rupee has depreciated about 12.5% since April 2025, despite healthy capital inflows.
SBI Research calls for stronger forex intervention
SBI Research argues that RBI's intervention in the foreign exchange market has been too limited. Using a Censored Tobit model, it estimates the central bank has intervened by an average of $14 million a day, which it believes is insufficient to curb volatility or arrest depreciation.
The report contrasts this with the 1997-98 period under former RBI Governor Bimal Jalan, when average intervention was around $55 million a day, helping stabilise the rupee despite much smaller forex reserves.
SBI Research projects India's balance of payments will post a surplus of more than $50 billion in FY27, supported by FCNR(B) deposits, remittances, FDI and portfolio inflows. However, it cautions that allowing the rupee to keep weakening despite strong inflows could trigger a self-reinforcing cycle of depreciation after the FCNR(B) mobilisation window closes on September 30.