RBI’s FCNR and Forex Measures Attract $40.81 Billion in Capital Inflows

The Reserve Bank of India’s special foreign exchange mobilisation measures have attracted $40.81 billion in inflows so far, strengthening the country’s external financial position and reinforcing efforts to support the rupee and foreign exchange reserves.

The Reserve Bank of India’s special foreign exchange mobilisation measures have attracted $40.81 billion in inflows so far, reflecting a strong response from non-resident Indians (NRIs), commercial banks, and overseas borrowers. The inflows have significantly strengthened India’s external financial position while providing additional support to the country’s foreign exchange reserves.

The mobilisation has been driven primarily through Foreign Currency Non-Resident (Bank) [FCNR(B)] deposits, along with higher participation in External Commercial Borrowings (ECBs) and other foreign currency funding channels. These measures were introduced to improve foreign currency liquidity, encourage stable capital inflows, and strengthen the resilience of India’s external sector amid evolving global financial conditions.

FCNR(B) deposits have accounted for the largest share of the inflows. The scheme allows NRIs to maintain fixed deposits in designated foreign currencies without exposing the principal amount to exchange rate fluctuations. Enhanced participation under the scheme reflects continued confidence among overseas Indians and financial institutions in India’s macroeconomic fundamentals.

The rapid increase in inflows has also strengthened the Reserve Bank’s ability to manage foreign exchange liquidity and cushion the economy against potential global market volatility. Larger forex reserves improve the country’s capacity to meet external payment obligations, support currency stability, and reinforce investor confidence during periods of uncertainty.

Unlike earlier episodes when similar measures were introduced in response to significant external financial stress, the current mobilisation has taken place under comparatively stable macroeconomic conditions. The strategy reflects a precautionary approach aimed at building stronger external buffers before global financial risks intensify.

The additional inflows are expected to provide greater flexibility in managing exchange rate movements while supporting India’s balance of payments. Stronger foreign exchange reserves also improve the country’s resilience against fluctuations in global capital flows, geopolitical uncertainties, and volatility in international financial markets.

Market participants expect inflows to remain robust while the special RBI measures remain operational. Continued participation by banks, overseas borrowers, and NRIs could further strengthen India’s external position and provide additional stability to the rupee over the coming months, even as policymakers continue to monitor global economic developments.

The mobilisation of more than $40.81 billion underscores the effectiveness of targeted monetary measures in attracting foreign currency resources. Going forward, sustaining investor confidence, maintaining macroeconomic stability, and ensuring adequate foreign exchange liquidity will remain important priorities for supporting India’s long-term external sector strength.