Measures announced by the Reserve Bank of India in June to attract dollar inflows have brought in nearly $32 billion so far, RBI Governor Sanjay Malhotra said in an interview with The Hindu BusinessLine, a development the central bank expects will bolster India’s balance of payments. Most of the funds have arrived through the Foreign Currency Non‑Resident (Bank) or FCNR(B) deposit scheme, while roughly $7 billion has come via foreign portfolio investments in debt securities after recent tax changes designed to lure overseas investors, he said.
Malhotra said the bulk of the inflows reflected fresh foreign currency moving into India rather than mere rebooking of existing deposits, a distinction that matters for assessing how much new external funding the measures have actually delivered. The FCNR(B) scheme allows non‑resident Indians and other eligible investors to place deposits in foreign currency with Indian banks, bringing hard currency into the banking system without immediately exposing depositors to rupee exchange risk.
The $7 billion in debt FPIs followed tax adjustments aimed at making Indian bond markets more attractive to global investors, increasing foreign participation in sovereign and corporate debt and deepening the capital available to the market. Such portfolio inflows can provide a steady source of foreign currency while broadening the investor base for Indian debt.
Despite the dollar receipts, Malhotra noted that the inflows had not fully translated into rupee liquidity in the domestic financial system, in part because an increase in government cash balances absorbed some funds. That underlines how government cash management and the RBI’s own operations can influence domestic liquidity conditions even when foreign currency enters the country.
On exchange‑rate policy, the RBI governor said there has been no change: the central bank intervenes in the foreign‑exchange market only to curb excessive volatility and does not target a specific level for the rupee. He added it would be reasonable to conclude the rupee is not undervalued at its current rate.
On monetary policy, Malhotra described the current policy repo rate of 5.25% as appropriate for prevailing growth and inflation dynamics. General inflation pressures remain modest, he said, but warned that higher food and fuel prices pose a real risk of feeding into broader inflation. The nearly $32 billion in inflows is expected to provide additional support to India’s external position as the RBI continues to monitor currency volatility, capital flows and inflation risks.
Original Source: https://www.firstpost.com/business/rbi-dollar-inflows-32-billion-debt-fpis-fcnr-deposits-sanjay-malhotra-14034089.html
Category: India
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Publish Date: 2026-07-27 08:54:00
