RBI's FCNR(B) bet could bring ₹5.2-6.2 lakh crore into India, ease rupee pressure: SBI Research

The Reserve Bank of India (RBI) may be set to replicate one of its most successful crisis-era measures to attract foreign capital, with SBI Research estimating that the central bank's latest initiatives could bring in $55-65 billion, or ₹5.2-6.2 lakh crore, of foreign inflows in FY27.

The move comes amid sustained foreign institutional investor (FII) outflows from Indian equities and heightened geopolitical tensions in West Asia that have weighed on the rupee. Rather than resorting to higher domestic interest rates, the RBI has chosen to revive the Foreign Currency Non-Resident Bank, or FCNR(B), route — a strategy that proved highly successful during the 2013 "taper tantrum".

NRIs, OCIs and foreign capital

FCNR(B) deposits are fixed-term deposits offered by Indian banks to non-resident Indians (NRIs), Overseas Citizens of India (OCIs) and persons of Indian origin. Since these deposits are maintained in freely convertible foreign currencies, investors are insulated from exchange-rate fluctuations during the tenure of the deposit. In addition, both the principal and interest earned are tax-free in India.

To encourage fresh inflows, the RBI has opened a special dollar-rupee swap window and exempted fresh FCNR(B) deposits from Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) requirements until September 30. The swap facility itself will remain available until October 16, 2026.

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FCNR(B) deposits

SBI Research estimates that FCNR(B) deposits alone could attract $40-45 billion, equivalent to ₹3.8-4.3 lakh crore at the current exchange rate of ₹95.27 to a dollar.

Banks are expected to offer attractive interest rates of 5.5-6% on these deposits, higher than current three-year US Treasury yields of around 4.2%, making them appealing to overseas Indians.

As of March 2026, outstanding FCNR(B) deposits stood at $33.8 billion. During the previous FCNR(B) mobilisation exercise in 2013, India had attracted around $24.5 billion in just three months.

Borrowing windows

Apart from FCNR(B) deposits, SBI Research expects the RBI's swap facilities for External Commercial Borrowings (ECB), Foreign Currency Convertible Bonds (FCCB) and Overseas Foreign Currency Borrowings (OFCB) to bring in another $15-20 billion, or ₹1.4-1.9 lakh crore.

These measures are aimed at reducing hedging costs, improving dollar liquidity and lowering funding costs for banks and public sector enterprises.

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Banking system and Rupee

According to SBI Research, the combined inflows of ₹5.2-6.2 lakh crore could lift banking system deposit growth to 14.5-15% in FY27, helping narrow the credit-deposit gap by nearly ₹1 lakh crore.

The report also expects India's balance of payments to swing into a surplus of $5-10 billion in FY27, a significant improvement from its earlier estimate of a deficit of $65-70 billion. Consequently, the current account deficit is projected to remain contained at 1.5-1.7% of GDP.

SBI Research believes the inflows could support the rupee and help anchor market expectations without requiring an immediate shift to a higher interest-rate regime.

The report cautioned, however, that excessive rupee depreciation poses greater risks than benefits and argued that the central bank should continue to intervene decisively to prevent sharp currency volatility. With inflows of more than ₹5 lakh crore potentially on the horizon, the RBI appears to be banking once again on overseas Indians to help stabilise the economy and strengthen India's external position.

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