NEW DELHI: Indian banks have attracted nearly $32 billion through dollar-inflow schemes introduced by the Reserve Bank of India (RBI) in June, helping strengthen the country’s balance of payments position, RBI Governor Sanjay Malhotra said in an interview with The Hindu Businessline published on Monday.
Malhotra said most of the funds came through the Foreign Currency Non-Resident (FCNR) deposit scheme, launched as part of measures to increase foreign currency inflows.
How Did India Attract $32 Billion in Foreign Currency Inflows?
The RBI governor said the majority of the inflows were generated through FCNR deposits, which allow non-resident Indians to place deposits in foreign currencies with Indian banks.
He added that around $7 billion had also entered through foreign portfolio investments (FPIs) into debt securities following tax-related changes.
Malhotra said the central bank had not found evidence that a large share of FCNR inflows resulted from the rebooking of existing deposits, suggesting that the measures had brought in fresh foreign currency.
The inflows are expected to support India’s external position by improving balance of payments conditions.
What Did the RBI Say About the Rupee and Interest Rates?
Malhotra said higher government cash balances were partly responsible for preventing foreign currency inflows from translating directly into increased rupee liquidity.
He said the RBI’s policy on the rupee remained unchanged, with the central bank intervening only to limit excessive volatility in the currency market.
“It would be reasonable to think the rupee is not undervalued,” Malhotra said.
On monetary policy, the governor said the current policy repo rate was appropriate given India’s growth and inflation conditions.
He said broad inflation pressures remained limited but warned that higher food and fuel prices could create risks if they spread into wider inflation.
The RBI continues to monitor external risks, including commodity price movements and global financial conditions, while maintaining its focus on price stability and economic growth.