The Reserve Bank of India has closed its FCNR(B) deposit window ahead of schedule after the scheme pulled in far more foreign currency than policymakers had expected. By mid-August the central bank had mobilised about $72.8 billion in total forex inflows, with the FCNR(B) route alone accounting for roughly $65.4 billion, enough momentum for the RBI to decide its extraordinary support measures were no longer urgently needed.

The early wind-down reflects a markedly stronger external position. Foreign exchange reserves climbed to around $716.9 billion by mid-August, near record levels, while the rupee steadied at roughly 95 to the dollar. Inflows accelerated sharply in the final stretch, about $13.1 billion in a single week, as banks rushed to lock in deposits before the deadline.

With complementary programmes such as ECBs and OFCBs still running through the end of the year, economists estimate cumulative mobilisation could reach $85-100 billion, meaningfully cushioning India's balance of payments and offsetting earlier worries about foreign investor outflows and softer investment trends.

The response also helped stabilise domestic bond yields and support the banking sector, where deposit growth quickened to 15.4 percent year-on-year by late July. Even so, the rupee has not appreciated much despite the improved fundamentals, held back by persistent global uncertainty and geopolitical risk.

Looking further out, analysts project the balance of payments could swing to a surplus of about $40 billion in FY27 from a $23 billion deficit a year earlier, provided crude prices stay near $80-85 a barrel and capital flows hold their positive trajectory.

Source: Forbes India