India Economic Comment: The dollar inflow puzzle, INR to stay range-bound

Research evidence excerpt

India Economic Comment: The dollar inflow puzzle, INR to stay range-bound

Global Research

28 July 2026ab

India Economic Comment Economics

IndiaThe dollar inflow puzzle, INR to stay range-

bound Tanvee Gupta Jain

Economist

tanvee.guptajain@ubs.com

+91-22-6155 6070

India has already mobilised over US$32bn of dollar inflows Rohit Arora

The RBI's measures announced in June to incentivise foreign currency inflows— Strategist

including relaxed norms for FCNR(B) deposits and overseas borrowings under the RBI- rohit-b.arora@ubs.com

+65-6495 5232

subsidised swap window—have already attracted approximately US$32bn in inflows in

around 45 days, with FCNR(B) deposits accounting for the bulk of these flows. The FCNR Alok Srivastava

(B) window will remain open until 30 September, leaving room for more inflows. We Analyst

believe use of the leveraged borrowing facility by the banks is driving the bulk of the alok.srivastava@ubs.com

+91-22-6155 6037

deposit accretion. As per our UBS India banking team, most banks are sounding positive

on the prospects of raising deposits through FCNR (B), although the numbers reported Adarsh Agarwal

by Indian banks so far—excluding foreign banks and SBI (which has yet to report)—do Associate Economist

not appear sufficient to explain the US$32bn mobilisation. Media reports suggest that adarsh.agarwal@ubs.com

MNC banks, such as HSBC and Standard Chartered Bank, have raised US$5.5bn and US

$1bn, respectively. If we extrapolate the total mobilisation under the 2013 scheme,

banks could potentially raise US$66bn or 2.4% of system deposits. This could lead to

deposit growth acceleration towards the mid-teens and sustain credit growth

momentum in the high teens. We expect large private banks to benefit more. Key ideas

are ICICI Bank and Axis Bank.