India Raises Record $127.23 Billion Through Special FCNR Deposit Drive

The Reserve Bank of India (RBI) has mobilised a record USD 127.23 billion through Foreign Currency Non-Resident (Bank), or FCNR(B), deposits, significantly strengthening the country’s foreign-exchange liquidity amid heightened global uncertainty.

According to provisional RBI data, FCNR(B) deposits stood at USD 127.226 billion as of August 31. Including overseas foreign-currency borrowings (OFCB) and external commercial borrowings (ECB), total mobilisation under the special measures reached USD 136.377 billion.

The programme witnessed a dramatic surge in mobilisation during its final 10 days, highlighting strong demand from overseas Indians and banks’ aggressive efforts to raise foreign-currency resources before the window closed. The response prompted the RBI to end the FCNR(B) facility a month ahead of schedule. Launched on June 8, it was originally scheduled to remain open until September 30.

FCNR(B) deposits allow non-residents to keep funds with Indian banks in foreign currencies, with principal and interest repaid in the same currency. The structure protects depositors from direct rupee depreciation risk while giving banks access to additional foreign-currency liquidity.

However, the large mobilisation also creates a future repayment and refinancing obligation for banks. As these deposits mature, banks will need to repay foreign-currency liabilities or refinance them, potentially creating pressure if global funding conditions tighten or foreign-exchange liquidity weakens.

Private-sector lender ICICI Bank separately reported gross FCNR(B) mobilisation of USD 17.88 billion by August 31. OFCBs contributed another USD 5.26 billion, while ECBs added USD 3.891 billion.

The RBI’s latest move echoes its 2013 FCNR(B) swap scheme, which attracted around USD 26 billion during the taper tantrum.

Meanwhile, India’s forex reserves surged USD 12.422 billion to a record USD 729.328 billion in the week ended August 21. The economy also grew 7.8% in Q1 FY27, exceeding the RBI’s forecast.