The Reserve Bank of India (RBI) has launched a special scheme to mobilize Foreign Currency Non-Resident (Bank), or FCNR(B), deposits from non-resident Indians (NRIs), with estimates suggesting inflows could reach $65-70 billion. This initiative, introduced to reverse a sharp decline in FCNR(B) inflows observed in previous fiscal years, aims to strengthen India's external finances and stabilize the rupee.
According to SBI Research, the strategy is already yielding results, with FCNR(B) deposits quickly surpassing the 2013 mobilization level of $26 billion within roughly 45 days. The latest figures indicate that banks have mobilized approximately $32 billion, primarily through FCNR(B) deposits, under these special measures by July 2026. This strong response from NRIs, coupled with renewed deposits under higher interest rates, is expected to significantly boost India's balance of payments, projected to post a surplus of over $50 billion in FY27.
Rupee Under Persistent Pressure
Despite the substantial influx of foreign currency, the Indian rupee has continued its weakening trend, depreciating by about 12.5% since April 2025. SBI Research attributes this disconnect partly to an accounting lag, where the increase in Foreign Currency Assets (FCA) is reflected gradually. Global factors such as geopolitical tensions, volatile energy prices, and cautious foreign portfolio flows also contribute to the rupee's vulnerability.
The report highlights concerns that allowing continued rupee depreciation, even amid strong capital inflows, could trigger a self-reinforcing cycle of weakening after the FCNR(B) mobilization window closes on September 30, 2026.
Calls for Stronger Forex Intervention
SBI Research has strongly advocated for increased intervention by the RBI in the foreign exchange market. Using a Censored Tobit model, the research estimates the central bank's average daily intervention at $14 million, which it deems insufficient to curb volatility or arrest the rupee's depreciation. This is contrasted with the 1997-98 period under former RBI Governor Bimal Jalan, when daily intervention averaged around $55 million, effectively stabilizing the currency despite much smaller forex reserves.
The central bank's special concessional swap facility encourages banks to attract fresh FCNR(B) deposits with maturities ranging from three to five years, signaling a long-term strategy to bolster India's currency reserves and economic stability.