The Reserve Bank of India’s concessional swap measures for FCNR (B) deposits, external commercial borrowings and overseas foreign currency borrowings could attract $90–95 billion in capital inflows during FY27, according to a CareEdge report.

The stronger-than-expected response to these measures has prompted CareEdge to revise its projections, pointing to a potentially significant improvement in India’s capital account and overall balance of payments position.

Highlights:

• FCNR (B) inflows are expected to reach around $80 billion, while ECBs and overseas foreign currency borrowings could contribute another $10–15 billion in FY27.
• India’s capital account surplus could rise to around $108 billion in FY27, compared with just $2 billion in the previous year.

Between June 5 and July 31, 2026, the measures had already attracted $40.8 billion, with FCNR (B) deposits accounting for $36.7 billion and ECBs and overseas foreign currency borrowings contributing another $4.1 billion.

What Is Driving the Inflows?

Higher deposit rates and favorable financing conditions are emerging as key factors behind the strong response to the RBI measures.

Large banks are currently offering FCNR deposit rates of around 6–6.5%, while some smaller and newer banks are offering rates close to 7%. The availability of significant leverage has also increased the attractiveness of the opportunity. CareEdge said some foreign banks are reportedly offering leverage of as much as 19–29 times in certain cases.

Based on the inflows recorded so far, CareEdge now expects FCNR (B) deposits to generate around $80 billion in FY27. ECBs and overseas foreign currency borrowings are expected to contribute another $10–15 billion.

Taken together, the inflows could push India’s capital account surplus to approximately $108 billion in FY27, compared with a surplus of only $2 billion in the previous year.

The improvement could also have a significant impact on India’s balance of payments. CareEdge expects the BoP to move to a surplus of around $64 billion in FY27, compared with deficits of $23.6 billion in FY26 and $5 billion in FY25.

The stronger external position could provide additional support to India’s foreign exchange stability while bringing more liquidity into the domestic banking system.

How Will the RBI Manage the Liquidity?

The expected foreign capital inflows are likely to substantially improve banking-system liquidity. CareEdge estimates that core liquidity could increase by around Rs 8.6 lakh crore as a result of the inflows.

However, some of this additional liquidity could be absorbed by seasonal currency demand and the maturity of the RBI’s forward positions.

Currency in circulation could increase by around Rs 1.1 trillion in December from June levels as demand for cash typically rises during the festive period. The maturity of around $30 billion in the RBI’s forward position could create another liquidity drag of roughly Rs 3 trillion.

After accounting for these factors, as well as the incremental cash reserve ratio requirement linked to deposit growth, CareEdge estimates that core liquidity could still reach a surplus of around Rs 9 lakh crore.

Such a large liquidity surplus could require active intervention from the central bank. CareEdge expects the RBI to use tools such as long-tenor variable rate reverse repos (VRRR) and open market operation (OMO) sales to absorb excess liquidity and maintain orderly financial conditions.

The expected $90–95 billion capital inflow, therefore, represents both an opportunity and a policy challenge. While stronger foreign currency flows can improve India’s external position and inject liquidity into the banking system, the RBI will need to carefully manage the resulting surplus to prevent excessive liquidity from creating broader financial imbalances.