India may draw USD 85 billion via RBI swap scheme: Report
India could attract USD 80 billion to USD 85 billion through the Reserve Bank of India's concessional swap facility designed to boost foreign currency inflows, according to a report released Monday by SBI's research team.
The report, "Ecowrap," said USD 20 billion had flowed in as of July 17 calling the figure a "positive reprieve." Foreign Currency Non-Resident (Bank) or FCNR(B) deposits made up the bulk of that total at USD 17.4 billion, followed by Overseas Foreign Currency Borrowings at USD 1.97 billion and External Commercial Borrowings at USD 1.34 billion.
SBI projected FCNR(B) deposits alone could reach USD 65 billion to USD 70 billion by the scheme's close, pushing the combined total including OFCBs and ECBs to USD 80 billion- USD 85 billion. Public sector banks are driving most of the FCNR(B) mobilization the report mentioned.
The RBI introduced the swap facility from June 5 as part of broader measures to shore up India's balance of payments and attract capital inflows. It took effect from June 8. FCNR(B) deposits under the scheme are accepted through September 30, while OFCBs and ECBs remain eligible through December 31.
The rupee initially strengthened after the RBI announcement, but gains faded as hopes for a U.S. and Iran agreement dimmed, energy prices stayed volatile and foreign portfolio investors grew cautious, the report said. Debt market inflows remained strong and equity flows showed some stability through June.
SBI forecasted that the capital account would gain an additional USD 75 billion to USD 85 billion in fiscal year 2026-27, with the transfer of funds into India from outside India surpassing USD 150 billion. The bank also projected foreign direct investment of USD 15 billion to USD 18 billion for the year along with stronger foreign institutional investment in the second half.
As a result, SBI now expects an overall balance of payments surplus exceeding USD 50 billion for fiscal 2026-27. A sharp reversal from its earlier forecast between USD 65 billion to USD 70 billion deficit. The current account deficit is projected at 1% to 1.2%of GDP for the year.
