The Indian diaspora, a force to reckon with worldwide, being among the most successful immigrant groups overall, has put more than a hundred billion dollars into the Indian banking system in June-August 2026, attracted by the Foreign Currency Non-Resident (Bank) deposit scheme of the Reserve Bank of India.
FCNR(B) deposits accounted for USD 127.226 billion in inflows as of August 31, the Reserve Bank of India (RBI) said on Wednesday.
Adding dollar inflows from overseas foreign-currency borrowings (OFCB) and external commercial borrowings (ECB) of the Indian banking system, total inflows under the RBI measures reached USD 136.377 billion.
The FCNR(B) funds — a record amount — were mobilised with the aim of bolstering India’s foreign-exchange liquidity, underscoring the growing role of its overseas diaspora as a buffer during periods of market stress.
The scale of the response prompted RBI to close the FCNR(B) window a month earlier than originally planned.
The facility, launched on June 8, was initially scheduled to remain open until September 30, but the deadline was brought forward to August 31 after the central bank said that its objective had been achieved ahead of schedule.
What are FCNR(B) deposits?
FCNR(B) deposits are fixed-term deposits held in foreign currencies, with the principal and interest repaid in the same currency, shielding depositors from direct rupee exchange-rate risk.
The FCNR(B) arrangement allows non-resident Indians (NRIs) to place foreign-currency funds with Indian banks without taking direct rupee-currency risk.
The inflows provide RBI with a larger pool of foreign currency to manage external pressures and support liquidity in the foreign-exchange market, particularly if rupee volatility intensifies.
This scheme — and its huge success in 2026 — also highlights India’s ability to tap its roughly 35-million-strong overseas diaspora for hard currency when global financial conditions become more challenging.
While the central bank did not provide bank-wise mobilisation of funds, private-sector lender ICICI Bank separately said that it has mobilised gross USD 17.88 billion through FCNR(B) deposits up to August 31.
Loans provided by international branches and subsidiaries of the bank against such deposits totalled USD 9 billion, while standby Letters of Credit issued by the bank to other banks in respect of loans against such deposits amounted to USD 3.63 billion.
The RBI measures included absorbing hedging costs for banks mobilising FCNR(B) deposits and permitting the banks to lend against the funds. The initiative was designed to strengthen India’s external-sector position and support foreign-exchange liquidity amid heightened global uncertainty.
Overseas foreign-currency borrowings contributed a further USD 5.26 billion, while external commercial borrowings brought in USD 3.891 billion, according to provisional RBI data.
RBI had last opened a special swap window in 2013
The RBI response in 2026 echoes India’s strategy during the 2013 “taper tantrum”, when the country launched measures to attract foreign-currency deposits from overseas Indians. At that time, the rupee had come under intense pressure following the US Federal Reserve’s plans to scale back monetary stimulus.
RBI’s 2013 FCNR(B) swap scheme had mobilised around USD 26 billion over nearly three months, and this was followed by a sharp recovery in the rupee.
The foreign currency deposits received through the swaps are reflected as foreign currency assets on RBI’s balance sheet, potentially providing an additional boost to India’s forex reserves.
As per the latest RBI data, the country’s foreign exchange reserves jumped by USD 12.422 billion to a new all-time high of USD 729.328 billion during the week ended August 21.
The large-scale mobilisation of long-term NRI deposits and institutional funding is expected to strengthen India’s external buffers, while providing foreign-currency resources to the banking and corporate sectors, the Indian finance ministry had said in a statement last week.
The response to the facility also highlights the continuing role of the Indian diaspora in supporting the country’s financial and economic growth, with NRIs channelling their savings into Indian banking instruments.
The strong mobilisation comes against the backdrop of a challenging global financial environment and is being seen as a reflection of confidence in the resilience of the Indian economy and its banking system, added the ministry.
India maintains economic resilience despite Iran war
India’s economy grew at a faster-than-expected 7.8 per cent in the April-June quarter, showing resilience in the face of concerns that the Iran war and resulting global economic uncertainty could weigh on growth.
Gross Domestic Product (GDP) growth in the first quarter of the 2026-27 fiscal year slowed from a barnstorming 8.6 per cent in the previous quarter, but remained well above expectations when the conflict erupted and disrupted energy markets.
The pace, which keeps India as the world’s fastest-growing major economy, also exceeded the Reserve Bank of India’s forecast of 7 per cent for the quarter, underscoring the strength of domestic economic activity despite heightened geopolitical risks.
Helped by robust foreign currency deposits and government spending, surplus liquidity in the banking system surged to nearly Rs 5 lakh crore (USD 53 billion approx.) at the end of August, its highest level in over four months.
