State Bank of India, HSBC India, and ICICI Bank have collectively raised $36.7 billion in foreign currency deposits from non-resident Indians. This surge in inflows helps stabilize the rupee and strengthens India's foreign exchange reserves. The program, reintroduced to counter currency depreciation, has seen outstanding deposits climb to over $60 billion.
Major Indian banks have recorded a massive influx of foreign currency deposits following the government and Reserve Bank of India’s move to revive a special deposit scheme for non-resident Indians. Official data reveals that this initiative has successfully attracted $36.7 billion in total inflows, providing a significant boost to the country's balance of payments. Among the lenders, HSBC India led the drive by securing approximately $6.14 billion. State Bank of India followed with $4.12 billion, and ICICI Bank contributed $3.7 billion to the total pool.
The reintroduction of this scheme comes after a decade-long hiatus, with its last major deployment occurring during the 2013 global market volatility known as the taper tantrum. By offering competitive interest rates on foreign currency accounts, the central bank aims to shore up liquidity and reduce the pressure on the Indian rupee, which had reached record lows earlier this year. As a result of these inflows, the total outstanding balance of foreign currency non-resident bank deposits has jumped from $32.56 billion to $60.55 billion.
Impact on India’s Foreign Exchange Reserves
These deposits serve as a vital source of stable foreign exchange, acting as a buffer against global economic uncertainty. While total inflows reached $36.7 billion, the net addition to the banking system's deposit stock stood at nearly $28 billion. The discrepancy between the total inflows and the net increase in deposit stock suggests that a portion of the funds involved existing foreign currency deposits that were simply rebooked to take advantage of the new, more favorable terms.
From a macroeconomic perspective, these inflows help the RBI maintain stability in the currency market without needing to aggressively sell down foreign exchange reserves. Analysts note that when combined with other forms of overseas capital, such as external commercial borrowings, the total support for the Indian financial system could exceed $90 billion. For investors, the stability provided by these inflows is a positive factor for banking stocks, as it reduces the risk of sudden currency-related volatility in the financial sector. The performance of these deposits will be a key monitorable in upcoming quarterly banking results, as the interest burden on these foreign currency liabilities will influence net interest margins for the participating banks.