Indian central bank’s capital flow measures draw over US$20 billion in first month
The move is to strengthen the country’s balance of payments and boost capital inflows
Published Mon, Jul 20, 2026 · 10:59 PM
[MUMBAI] India’s central bank has attracted more than US$20 billion under a set of measures announced to strengthen the country’s balance of payments and boost capital inflows, the Reserve Bank of India said on Monday (Jul 20), about a month after the steps were unveiled.
The RBI in June announced a series of foreign exchange measures, including concessional hedging facilities and swap arrangements, to encourage overseas fundraising by state-run firms, banks and through foreign currency non-resident deposits.
The crisis-era steps came against the backdrop of sustained pressure on the Indian rupee that had declined to a series of record lows as the Iran war sharply lifted oil prices, raising the risk of a third consecutive year of a balance of payments (BoP) deficit for India.
The central bank said it received US$17.41 billion via Foreign Currency Non-Resident (FCNR) deposits raised by banks and swapped with the RBI under a zero-cost facility, which has allowed banks to offer higher returns on such deposits.
The RBI also received US$1.34 billion via swap facilities for External Commercial Borrowings (ECB) and US$1.97 billion through Overseas Foreign Currency Borrowings (OFCB) undertaken by authorised lenders.
The measures have drawn a cumulative US$20.7 billion between June 8 and July 17.
The scale of inflows is in particular focus for the rupee, which is facing renewed pressure from a sharp rise in oil prices amid renewed hostilities in the Middle East. The currency declined to a two-month low of 96.5250 on Monday.
Under the swap facility, the inflows are absorbed by the central bank and reflect as part of its foreign exchange reserves.
“We believe the comfort from additional capital flows will lead to a mild BoP surplus for the year and moderate the pace of depreciation in the rupee,” said Gaura Sen Gupta, chief economist at IDFC First Bank.
“The RBI will likely use this opportunity to bring down the size of its forward book,” Sen Gupta said.
At the end of May, the central bank’s net forward dollar liabilities stood at US$106.6 billion, while foreign exchange reserves were at US$675.1 billion as of July 10. REUTERS
