The Reserve Bank of India’s recent initiatives to attract foreign capital could generate inflows of USD 55-65 billion, strengthen the rupee to around 92 against the US dollar, and help India return to a balance of payments surplus in FY27, according to a report by State Bank of India.
The report said the RBI’s measures announced in February and June 2026 should be viewed as part of a coordinated strategy aimed at supporting the rupee, deepening domestic financial markets, attracting stable overseas capital, and easing external funding conditions.
According to SBI, the two rounds of measures served different but complementary objectives.
“The February measures on ECB were structural and market development oriented, while the June measures aimed to attract foreign currency inflows and support rupee without raising domestic interest rates,” the report stated.
The bank expects the RBI’s latest initiatives to generate substantial foreign currency inflows through Foreign Currency Non-Resident (Bank) deposits, or FCNR(B), as well as through the External Commercial Borrowing (ECB) and Overseas Foreign Currency Borrowing (OFCB) swap window.
SBI estimates that FCNR(B) deposits alone could attract between USD 40 billion and USD 45 billion.
The report noted that Indian banks are currently able to offer FCNR(B) deposit rates of around 5.5 percent to 6 percent, compared with US three-year bond yields of approximately 4.2 percent.
However, it pointed out that the scope for aggressive mobilisation through leveraged strategies has narrowed compared with the 2013 FCNR(B) programme.
The interest rate differential between India and the United States has reduced significantly, with the gap standing at 2.1 percent for three-year deposits and 2.2 percent for five-year deposits.
In addition, SBI expects the ECB/OFCB swap window to generate another USD 15-20 billion by encouraging fresh foreign currency borrowings and improving the availability of dollars in the domestic market.
Taken together, the report estimates total inflows of USD 55-65 billion.
According to SBI, these inflows could substantially improve liquidity conditions across the banking system.
The report projects deposit growth of 14.5-15 percent in FY27, compared with expected credit growth of around 16 percent.
As a result, the gap between credit and deposit growth is expected to narrow significantly after adjusting for regulatory measures.
SBI also revised its outlook on India’s external sector.
The report now expects India’s balance of payments to record a surplus of USD 5-10 billion in FY27, a sharp improvement from its earlier estimate of a USD 65-70 billion deficit.
Higher inflows would also boost the RBI’s foreign exchange reserves and enhance its ability to manage volatility in the currency market.
At the same time, the report cautioned against allowing excessive depreciation of the rupee, arguing that the economic costs associated with sustained currency weakness currently outweigh the benefits of greater exchange rate flexibility.
According to SBI, the expected inflows have the potential to strengthen macroeconomic stability, support the rupee, improve liquidity conditions, and provide a more favourable funding environment for the banking system during FY27.
