RBI’s Policy Push Could Help India Maintain Balance-of-Payments Buffer Of Up To $75 Billion In FY27

New Delhi: The Reserve Bank of India’s measures to attract foreign currency inflows could help the country maintain a balance-of-payments surplus of $65-75 billion in FY27, according to a Bank of Baroda report.

The report described the RBI’s recent initiatives as a major success, with foreign inflows strengthening India’s external position at a time of heightened geopolitical uncertainty.

Forex Reserves Hit Record High

The RBI’s foreign inflow measures mobilised around $136.4 billion, providing a substantial boost to India’s forex reserves and giving the central bank greater room to manage currency volatility.

India’s foreign currency assets increased by $47.9 billion, taking total foreign exchange reserves to a record $729.3 billion.

“The outlook on the economy is promising as even though there is still uncertainty over the situation in the Middle-East, India now is insulated to withstand any unfavorable external shock,” the report said.

The current account deficit is projected at around 1-1.25% of GDP, supported by resilient services exports and remittances.

FCNR(B) Deposits Drive Inflows

Around $127.2 billion, or more than 90% of the total mobilisation, came through FCNR(B) deposits. Overseas Foreign Currency Borrowings contributed $5.3 billion, while external commercial borrowings added $3.9 billion.

Several banks increased interest rates on three-to-five-year FCNR(B) deposits from around 2-4% to 6-7%, making them more attractive to NRIs.

Meanwhile, the RBI has been absorbing excess liquidity through Variable Rate Reverse Repo auctions.

The central bank announced VRRR auctions totalling Rs 53.5 lakh crore between August 6 and September 2 as policymakers sought to manage liquidity while strengthening India’s external financial buffers.