The State Bank of India’s latest report predicts that the Reserve Bank of India’s recent actions will attract $55-65 billion in foreign investments this fiscal year. These measures aim to stabilize the rupee and shift the country’s balance of payments into surplus. The RBI’s strategies include enhancing the rupee, deepening the domestic debt market, and facilitating access to external funding.
Following the June monetary policy announcement, the RBI introduced various initiatives to boost foreign currency inflows. These efforts involve a concessional forex swap facility to encourage external commercial borrowings by public sector undertakings and a similar facility for banks raising fresh Foreign Currency Non-Resident deposits.
The report highlights that the February measures focused on structural reforms and market development, while the June initiatives specifically target attracting foreign currency inflows without raising domestic interest rates. SBI estimates that the anticipated inflows could significantly enhance liquidity in the banking system, potentially leading to a rise in deposit growth to 14.5-15% in FY27.
SBI also revised its outlook for India’s external sector, now expecting a balance of payments surplus of $5-10 billion in FY27, a substantial improvement from the previous estimate of a deficit. The report projects India’s current account deficit to remain around 1.5-1.7% of GDP for the fiscal year.
