Archive · 1 Sep 2026
FCNR Inflows Strengthen India’s External Position Amid Global Uncertainty
India received a large amount of foreign money through bank deposits and other inflows.
Much of this money came through FCNR(B) deposits, which are deposits held in foreign currencies by non-resident Indians.
The Reserve Bank of India created a special currency-swap facility to improve foreign-exchange liquidity.
The Chief Economic Adviser said these inflows help India pay for imports and support the rupee against the US dollar.
India’s economy grew 7.8% from April to June.
This was slower than the 8.6% growth in the previous quarter but stronger than expected.
Manufacturing and services performed well, while agriculture grew more slowly than a year earlier.
Officials remain positive about India’s economy but warn that global conflicts, energy prices, interest rates and food prices could create problems later.
India attracted USD 56.84 billion through recent foreign-exchange inflows, including USD 52.3 billion in FCNR(B) deposits.
Chief Economic Adviser V. Anantha Nageswaran said FCNR(B) mobilisation strongly supports the balance of payments and provides a floor for the rupee against the US dollar.
The Reserve Bank of India introduced a special USD-INR forex swap facility on June 8, 2026, covering FCNR(B) deposits, ECBs and OFCB inflows.
India’s GDP grew 7.8% in April-June, the first quarter of fiscal year 2026-27, faster than expected but below the previous quarter’s 8.6% growth.
Nageswaran said domestic momentum and exports remain strong, while interest rates, energy supplies, food prices and West Asia-related uncertainty pose global risks.
- Who
- The Reserve Bank of India and Chief Economic Adviser V. Anantha Nageswaran are central to the report; India’s economy and non-resident depositors are also involved.
- What
- FCNR(B) inflows supported India’s balance of payments and currency, while the economy recorded 7.8% first-quarter GDP growth.
- When
- The reported quarter was April-June of fiscal year 2026-27; the RBI introduced the forex-swap facility on June 8, 2026, and Nageswaran commented on Monday after the GDP release.
- Where
- India, with effects on the Indian rupee’s value against the US dollar.
- Why
- The RBI sought to strengthen India’s external position and foreign-exchange liquidity amid global market uncertainty.
Domestic Resilience
Global Risks
Economic outlook
Domestic Resilience
Nageswaran said strong domestic momentum, export performance and structural reforms have supported another quarter of very strong growth.
Global Risks
He warned that unresolved global issues could eventually affect economic activity in India.
External stability
Domestic Resilience
The CEA said FCNR(B) mobilisation strongly supports the balance of payments and provides a floor for the rupee against the US dollar.
Global Risks
Global uncertainty involving interest rates, energy supplies, food prices and the West Asia conflict could pressure India’s external and economic position.
Growth drivers
Domestic Resilience
Manufacturing and services performed well, and government efforts helped prevent war-related disruptions from affecting input supplies.
Global Risks
Agriculture grew 3.6%, down from 4.4% in the year-ago period, showing that performance was not equally strong across all sectors.
- Total inflows
- USD 56.84 billion
- FCNR(B) inflows
- USD 52.3 billion
- GDP growth
- 7.8% in April-June, fiscal year 2026-27
- Previous-quarter GDP growth
- 8.6%
- RBI facility
- Special USD-INR forex swap facility introduced June 8, 2026
- Agriculture-sector growth
- 3.6%, compared with 4.4% in the year-ago period
- Sectors supporting growth
- Manufacturing and services performed strongly; agriculture, livestock, forestry and fishing grew more slowly