04 September,2026 04:15 PM IST | New Delhi | mid-day online correspondent
Representational Image. File pic.
According to a Bank of Baroda report, the Reserve Bank of India's (RBI) special forex swap window to bolster foreign-exchange liquidity mobilising inflows of USD 136.4 billion will help the country to maintain a balance of payments surplus of USD 65-75 billion in the current fiscal year.
The forex reserves which stand at a record high, strengthened after the RBI's initiative and this would help to defend the rupee, as per news agency IANS.
"The outlook on the economy is promising as even though there is still uncertainty over the situation in the Middle-East, India now is insulated to withstand any unfavourable external shock," the report said.
India's foreign currency assets expanded by USD 47.9 billion, taking total foreign exchange reserves to a record USD 729.3 billion.
The RBI mobilised a record USD 127.23 billion through Foreign Currency Non-Resident (Bank), or FCNR(B), deposits, as of August 31.
Including overseas foreign-currency borrowings (OFCB) worth USD 5.3 billion and external commercial borrowings (ECB) of USD 3.9 billion, the total inflows under the measures reached USD 136.377 billion.
The report also noted that RBI is actively absorbing excess liquidity as it announced Variable Rate Reverse Repo (VRRR) auctions adding to Rs 53.5 lakh crore between August 6 and September 2.
The report forecasts the current account deficit at about 1-1.25 per cent of GDP.
Foreign Currency Non-Resident (Bank) or FCNR (B) deposits is a fixed-term deposit account offered by Indian banks. It allows non-resident Indians (NRIs), persons of Indian origin, or overseas citizens of India to maintain a fixed deposit in specified foreign currencies. The funds and the interest on these deposits is exempted from tax in India. The RBI permits these deposits to encourage foreign currency inflows that helps to safeguard the rupee against depreciation and to strengthen India's foreign exchange reserves.
The Reserve Bank of India had launched the concessional FCNR swap window on June as part of broader steps to encourage capital inflows to boost India's balance of payments during global uncertainty. Under this facility, banks can mobilise new FCNR-B deposits and exchange the dollars with the RBI at a lower, concessional rate.
Several banks raised rates on 3-5 year FCNR(B) deposits from around 2-4 per cent to 6-7 per cent, making the deposits more attractive to NRIs, as per IANS.
The facility that was implemented on June 8, 2026, and is available up to September 30, 2026, for the FCNR (B) deposits and up to December 31, 2026, for the Overseas Foreign Currency Borrowings and External Commercial Borrowings.
The government and RBI announced these measures to boost inflows as the West Asia crisis created significant challenges for the Indian economy. The rising oil prices and foreign portfolio investor outflows led to concerns over external stability given India is the third largest consumer and importer of crude oil.
(With inputs from IANS)
