Overall deposits in India’s banking system surged by around Rs 7 lakh crore for the fortnight ended June 30, 2026, marking the third-highest fortnightly growth in 29 years, as per a report by State Bank of India (SBI) Research.
The increase in deposits was attributed to buoyant capital flows supported by recent measures by the Reserve Bank of India and the government. Commercial paper and bank credit also expanded, indicating a positive economic activity trend in Q1FY27.
Driven by factors like renewed Foreign Currency Non-Resident (Bank) [FCNR(B)] deposits, External Commercial Borrowings (ECBs), and Overseas Foreign Currency Borrowings (OFCBs) inflows, the capital flows could have risen by about $15 billion, excluding quarter-end mobilization. Additionally, India received $7 billion in FII inflows post the government’s foreign inflow measures.
The report highlighted that RBI’s foreign currency reserves grew by $4.4 billion during the fortnight, showcasing an effort to bolster foreign exchange reserves. G-sec yields outperformed corporate bond yields in May and June, supported by foreign inflows and robust sovereign bond demand.
Commercial paper issuances surged in Q1FY27, reaching a 55-month high in June, while incremental bank credit exhibited notable growth. The rupee appreciated by about 2.2% by June-end from its recent low, despite facing pressures from geopolitical tensions and rising Brent crude prices.
The outlook for the Indian Rupee (INR) remains positive, with expectations of the average crude oil price for India’s basket to stay at $80 or lower, potentially resulting in significant savings in the oil import bill.
