India may return to balance of payments surplus in FY27 on $65-billion forex boost, says SBI – Firstpost

A new SBI Ecowrap report says the RBI’s latest measures — including special forex swap facilities for FCNR(B) deposits and external commercial borrowings (ECBs) — could bring additional foreign currency inflows worth $55–65 billion in FY27, strengthening the rupee and improving India’s external position.

The report says RBI’s February and June 2026 measures represent a coordinated strategy to stabilise the Indian rupee, attract long-term foreign capital, deepen domestic debt markets and reduce pressure on external funding.

A major part of the expected inflows could come through Foreign Currency Non-Resident Bank (FCNR-B) deposits. SBI Research estimates this route alone could attract around $40–45 billion, helped by attractive deposit rates and RBI’s dollar-rupee swap facility.

The central bank has introduced a forex swap window for fresh FCNR(B) deposits with a maturity of three to five years. SBI compared the move with RBI’s 2013 strategy, when a similar facility helped India attract $24.5 billion during a period of severe rupee pressure.

Another $15–20 billion could come from ECB and Overseas Foreign Currency Borrowing (OFCB) routes, as lower hedging costs make overseas borrowing more attractive for companies and banks.

The biggest impact could be visible in India’s balance of payments (BoP). SBI Research now expects India’s BoP to move into a $5–10 billion surplus in FY27, a major reversal from its earlier estimate of a $65–70 billion deficit.

The report also expects banking system deposit growth to improve to around 14.5–15 per cent, narrowing the gap between credit and deposit growth and supporting lower interest rates.

However, SBI warned that the RBI cannot afford to take a passive approach toward currency weakness.

“In the current environment, a passive approach could prove costly,” the report noted, adding that decisive intervention would help anchor expectations, control imported inflation and protect macro-financial stability.

The report also said expectations of an immediate interest rate hike cycle appear premature, arguing that future policy decisions should remain data-dependent.

With global uncertainty and currency volatility remaining high, SBI believes RBI’s latest dollar inflow strategy could provide the firepower needed to defend the rupee.