The RBI’s February and June 2026 measures should be viewed as a coordinated attempt to stabilise the rupee, deepen the domestic debt market, attract more stable foreign capital and reduce friction for external funding, Ecowrap Report from the SBI’s Economic Research Department said.
Also read: RBI offers concessional swaps for PSUs, NRI deposits to drive forex inflows
Following the June monetary policy, the Reserve Bank of India (RBI) has taken a host of measures to attract foreign capital and strengthen the country’s balance of payments (BoP).
The measures include a facility of concessional forex swap to incentivise external commercial borrowings (ECBs) by public sector undertakings. The RBI has also provided a similar facility for banks to raise fresh 3-5-year FCNR (B) deposits.
The February measures on the ECB were structural and market development oriented, while the June measures aimed to attract foreign currency inflows and support the rupee without raising domestic interest rates, the SBI report said.
“The estimated USD 55-65 billion inflows will ensure that the deposit growth for FY27 for the banking system could jump to around 14.5-15 per cent against a potential credit growth of 16 per cent,” it added.This will mean that the credit deposit gap after adjusting for regulatory dispensation will shrink by around Rs 1 lakh crore and ensure that the term structure of interest rates decline further, the report said.
It may be noted that in FY14, the FCNR (B) fund mobilisation deposit and credit growth were almost identical, it added.
“The overall balance of payment would be in the range of USD 5 to USD 10 billion surplus for FY27. This is way above our previous estimate of USD 65-70 billion deficit. Subsequently, the current account deficit would be in the range of 1.5-1.7 per cent of GDP,” said the Ecowrap Report.
BoP is the country’s overall record of money flowing in and out. It includes current account (trade in goods and services, remittances), and capital and financial account (foreign investment, external borrowing, FDI, portfolio flows).
To arrest the depreciation of the rupee against the USD, the RBI has introduced a US dollar-rupee forex swap facility for fresh FCNR (B) deposits, mobilised for a minimum tenor of three years and a maximum tenor of five years.
This facility comes into effect on Monday and will remain open up to October 16, 2026.