Analysts have revised their estimates for FCNR(B) deposit inflows, projecting totals between $90 billion and $100 billion, surpassing previous forecasts.
New Delhi, India Aug 25, 2026 ALN: Mumbai: Strong momentum in foreign currency non-resident (bank), or FCNR (B), deposit inflows over the past week has prompted some analysts to raise their estimates for dollar inflows through the scheme. The FCNR (B) scheme, which allows non-resident Indians (NRIs) to deposit funds in foreign currency, has become a significant avenue for attracting foreign investments into India. This influx is particularly crucial as it helps bolster the country's foreign exchange reserves, which are essential for maintaining the stability of the Indian rupee and supporting growth.
Analysts noted that robust fundraising by banks and heightened demand for the scheme among overseas investors suggest that inflows could exceed earlier projections. Jefferies India stated in a note on Monday that it now expects FCNR inflows to reach between $90 billion and $100 billion by the time the scheme closes on August 31, a significant increase from its previous estimate of $70 billion to $80 billion. This new estimate also surpasses the $80 billion projected by RBI governor Sanjay Malhotra in a recent interview, reflecting an optimistic outlook on the part of financial analysts regarding the appeal of the FCNR scheme among NRIs.
According to Jefferies analyst Prakhar Sharma, "Indian banks have mobilised $16 billion over eight days (August 13-21) through FCNR-B and other schemes, bringing the total to $73 billion, which exceeds our estimates. Given substantial debt issuance completed recently and anticipated in the near future, banks could surpass our estimated range of raising $70-80 billion, potentially landing at $90-100 billion by August 31." The increase in inflows can be attributed to several factors, including the favorable interest rates offered by banks on FCNR deposits compared to other investment avenues, as well as the stability of the Indian , which remains an attractive proposition for NRIs looking to invest their funds securely.
Data released on Saturday indicated that FCNR (B) deposits accounted for a notable share of total dollar inflows, amounting to $65.39 billion out of a total of $72.80 billion. This highlights the importance of the FCNR (B) scheme as a key contributor to India's foreign currency reserves. Banks added another $13 billion through the FCNR (B) window over the past week, increasing the total from $52.30 billion as of August 13, according to the latest RBI update. The rapid accumulation of deposits suggests that NRIs are increasingly drawn to the scheme, likely due to favorable exchange rates and the stability of the Indian banking system.
Higher inflows will necessitate increased spending by the central bank to provide the swap facility, as highlighted by Yes Bank chief economist Indranil Pan. He noted, "Since it is a bullet repayment, the dollars will have to be delivered in one go, which incurs costs. One estimate we conducted indicated that for $65 billion of inflows, $88 billion will need to be provided, including interest costs." This need for the central bank to manage liquidity carefully is crucial, as it ensures that the influx of foreign currency does not destabilize the financial system or lead to inflationary pressures.
The impact on the rupee has been relatively limited, with the Indian currency trading in the ₹95 to ₹96 per dollar range, showing no signs of a sharp rise. Pan remarked, "The impact on the rupee has been marginal because oil prices remain high. Unless oil prices decrease to $75 to $80 per barrel, pressure on the rupee will persist. We maintain our estimate of ₹97 per dollar by the end of the fiscal year." The rupee's stability is vital for both domestic and international investors, as significant fluctuations can create uncertainty in the market.
As of Monday, the Indian currency closed at ₹95.74 per dollar, while Brent crude was trading at around $93 per barrel. The relationship between oil prices and the rupee's performance is a critical factor in India's landscape, given that the country is one of the largest importers of crude oil. High oil prices can lead to a widening trade deficit, which in turn can exert downward pressure on the rupee.
Upasna Bhardwaj, chief economist at Kotak Mahindra Bank, revised her expectations for FCNR (B) inflows from $70 billion to a new range of $75 billion to $80 billion due to the observed momentum. She commented, "Perhaps the RBI anticipated strong inflows and advanced the timeline," referring to the RBI's decision to move the deadline for banks to accept incentive-laden FCNR (B) deposits to August 31, one month earlier than previously set. This proactive approach by the RBI is indicative of its commitment to fostering a conducive environment for foreign investments, which are essential for sustaining growth and development in India.
In conclusion, the anticipated surge in FCNR deposits reflects not only the confidence of NRIs in the Indian but also the strategic measures taken by financial institutions and regulatory bodies to attract foreign capital. As the August 31 deadline approaches, the dynamics of foreign currency inflows will continue to play a crucial role in shaping the landscape of India, influencing everything from currency stability to overall growth. The implications of these developments will be closely monitored by economists, investors, and policymakers alike, as they navigate the complexities of the global financial environment.
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