RBI to close forex deposit window on schedule, expects FY27 BoP surplus

The Story in Brief

The Reserve Bank of India (RBI) said it has no immediate plans to end or extend the special FCNR(B) foreign currency deposit window before the 30 September deadline, governor Sanjay Malhotra told a post‑policy press conference. He said inflows under the scheme have been robust and that capital‑flow measures taken in June supported those inflows. The RBI on 5 June allowed banks to raise fresh and renewed FCNR(B) deposits with three‑ to five‑year maturities and swap those dollars with the central bank at a concessional rate.

In 53 days India mobilised $40.8 billion under FCNR(B), external commercial borrowings and overseas foreign‑currency borrowings, with FCNR(B) deposits accounting for 90% of the total. HSBC, State Bank of India and ICICI Bank drew about half of the inflows. An IDFC FIRST Bank report revised the FY27 balance‑of‑payments surplus estimate to $40 billion and put the current account deficit at 1.7% of GDP. Malhotra said the BoP is expected to register a healthy surplus and that liquidity could improve from FCNR dollar flows but may normalise beyond September.

The Indian Opinion

Readers should be cautious about one‑sided interpretations that treat the strong inflows as a permanent fix or, at the other extreme, as proof of imminent currency collapse. The reporting shows clear short‑term gains – large FCNR(B) receipts and a revised BoP surplus estimate – but also notes earlier shrinkage in capital surplus and past rupee depreciation linked to capital‑account weakness. The RBI’s decision to keep the deadline signals confidence, not certainty: the BoP outlook depends on assumptions such as swaps maturing and replacement by longer‑term flows. Given those conditions, future liquidity and exchange‑rate pressures remain uncertain.

Original article: RBI to let special forex deposit window close on schedule despite strong flows, sees healthy BoP surplus in FY27 (www.livemint.com)

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