RBI measures may drive $40–50 billion forex inflows in FY27: MOFSL
Synopsis
The RBI's new FCNR(B) and ECB facilities could channel $40–50 billion into India's banking system in FY27 — rivalling the landmark 2013 programme that pulled in $34 billion in NRI deposits. With the rupee potentially heading to 93–94 against the dollar, this is the most consequential foreign-currency mobilisation drive in over a decade.
Key Takeaways
The RBI's new FCNR(B) and ECB facilities are projected to generate $40–50 billion in forex inflows in FY27 , per MOFSL .
Banks could cut borrowing costs by 200–250 basis points via the ECB route under the RBI's concessional swap framework.
FCNR(B) deposits currently represent only 1.2% of total banking deposits, indicating significant room for growth.
The initiative mirrors a 2013 RBI programme that attracted nearly $27 billion in FCNR(B) inflows and $34 billion in total NRI deposits.
MOFSL estimates the rupee could strengthen to the 93–94 range against the US dollar as inflows accelerate.
Banks with established overseas networks are expected to capture the largest share of new inflows, according to the report.
The Reserve Bank of India's (RBI) latest steps to attract foreign currency are projected to deliver total inflows of $40–50 billion in FY27, according to an analysis by Motilal Oswal Financial Services Ltd (MOFSL) released on Friday, 12 June. The measures are expected to bolster India's forex reserves, ease banking system liquidity, and lend support to the rupee.
What the RBI Has Introduced
The central bank recently rolled out special facilities for Foreign Currency Non-Resident [FCNR(B)] deposits and External Commercial Borrowings (ECBs), enabling banks to raise overseas funds at comparatively lower costs. Under the RBI's concessional swap framework, banks could see borrowing costs fall by approximately 200–250 basis points through the ECB route, according to the MOFSL report.
Notably, FCNR(B)-linked funding also offers banks a spread advantage of around 60–65 basis points over conventional wholesale deposits, owing to exemptions from Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) requirements.
Echoes of the 2013 Programme
The current initiative draws clear parallels with a similar RBI programme launched in 2013, which generated FCNR(B) deposit inflows of nearly $27 billion and total NRI deposit inflows of around $34 billion. That programme also contributed to shoring up India's foreign exchange reserves and stabilising the currency market during a period of significant rupee stress.
At present, FCNR(B) deposits account for only about 1.2% of the banking system's total deposits, suggesting, according to the report, substantial headroom for expansion. Banks have already begun raising FCNR(B) deposit rates across key maturities to make these instruments more attractive to non-resident Indian (NRI) customers.
Impact on Banks and Credit Growth
Lower funding costs are expected to support credit growth, strengthen lending activity, and improve funding efficiency across the banking sector. The MOFSL analysis notes that banks with stronger customer franchises and well-established overseas networks are best positioned to capture a disproportionately large share of the anticipated inflows.
The report further highlighted that the framework's structure creates incentives for both depositors and banks, encouraging broader participation than previous cycles.
Rupee Outlook and Investor Confidence
MOFSL has estimated that stronger foreign currency inflows, improved liquidity, and higher reserve buffers could push the rupee towards the 93–94 range against the US dollar in the near term as inflows gather pace. The brokerage added that these dynamics could reinforce overall currency stability and lift investor confidence at a time when global market volatility and capital flow trends remain closely watched.
The measures come as India seeks to deepen its external funding channels and reduce dependence on volatile portfolio flows, making the FY27 inflow trajectory a key variable for both monetary policy and market sentiment.
Point of View
But the 2013 comparison cuts both ways — that programme worked because the rupee was under acute stress and NRI sentiment was sharply risk-averse, conditions that are not fully replicated today. The 1.2% share of FCNR(B) in total deposits signals untapped potential, but it also reflects years of tepid NRI interest even when rates were competitive. The real question is whether the concessional swap window is priced attractively enough to shift behaviour at scale, or whether only the largest private banks with deep diaspora networks will benefit, widening the gap with mid-tier public sector lenders. A $40–50 billion target is ambitious; execution and rate competitiveness will determine whether FY27 matches 2013 or falls short.
NationPress
28 Jul 2026
Frequently Asked Questions
What are the RBI's new measures to boost forex inflows?
The RBI has introduced special facilities for FCNR(B) deposits and External Commercial Borrowings (ECBs), allowing banks to raise overseas funds at lower costs. A concessional swap framework under the ECB route can reduce bank borrowing costs by around 200–250 basis points.
How much forex inflow is expected in FY27 under these measures?
According to a report by Motilal Oswal Financial Services Ltd (MOFSL), total foreign currency inflows could reach $40–50 billion in FY27. This projection covers both FCNR(B) deposits and ECB-linked flows.
How does this compare to the RBI's 2013 programme?
The 2013 RBI programme attracted nearly $27 billion in FCNR(B) deposit inflows and around $34 billion in total NRI deposits, while also stabilising India's forex reserves and the rupee. The current initiative is structurally similar but targets a larger inflow pool.
What is the outlook for the rupee under these measures?
MOFSL estimates the rupee could strengthen towards the 93–94 range against the US dollar in the near term as inflows pick up pace. Improved reserves and liquidity are expected to support broader currency stability.
Which banks are likely to benefit the most?
Banks with stronger customer franchises and established overseas networks are expected to capture the largest share of inflows, according to the MOFSL report. FCNR(B)-linked funding also gives banks a 60–65 basis point spread advantage over traditional wholesale deposits due to CRR and SLR exemptions.
