RBI Attracts $39bn Foreign Capital via FCNR(B) Deposits – Impact on Balance of Payments

Overview In a recent interview, Sanjay Malhotra , Governor of the RBI , said that the June 2026 policy steps have drawn about $32 billion through FCNR(B) deposits and more than $7 billion into government securities. These inflows improve India’s external position amid global uncertainty. Key Developments Foreign capital of roughly $39 billion entered India since the June measures, mainly via FCNR(B) deposits and sovereign bonds. The RBI assures that the inflows are not just a recycling of existing funds and that it has tools to manage any liquidity impact. Concerns about hedging costs on fresh FCNR(B) deposits and concessional forex swaps for ECBs were dismissed as the RBI has a “fool‑proof” risk‑mitigation system. The Governor emphasized that the rupee’s recent fall reflects geopolitical tension and a strong dollar, not weak fundamentals, and that the RBI does not target a specific exchange‑rate band. Important Facts The RBI continues to manage its forex reserves on the basis of safety, liquidity and returns. Inflation remains the top priority; the MPC follows a data‑dependent approach, keeping the policy rate aligned with the prevailing growth‑inflation trade‑off. Although inflation is above the 4 % midpoint of the inflation target , the RBI does not see entrenched broad‑based price pressures. UPSC Relevance Understanding these measures helps answer questions on India’s external sector, monetary policy framework, and exchange‑rate management—core topics in GS III: Economy . The concepts of balance of payments , foreign capital inflows, and RBI’s policy tools are frequently asked in prelims and mains. Way Forward The RBI is likely to keep monitoring global capital flows and may adjust liquidity tools if needed. Continued focus on inflation control, prudent reserve management, and maintaining a stable external sector will support growth while safeguarding against external shocks.