Barclays remains optimistic that RBI measures will help improve India’s balance of payments position.
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Dado Ruvic
India’s efforts to strengthen its external position through the Reserve Bank of India’s (RBI) special FCNR(B) deposit scheme have received a more muted response than markets initially expected, according to a Barclays FX Insights India Report.While the scheme was launched to attract foreign currency deposits from non-resident Indians (NRIs) and bolster foreign exchange reserves, inflows so far have been significantly below the lofty projections circulating in the market.The Barclays report estimates FCNR inflows have reached only about $5-6 billion to date, compared with market expectations ranging from $40 billion to $70 billion. Barclays itself had projected a more modest base-case inflow of $25-30 billion over the coming months.FCNR depositsAccording to the report, expectations may have been inflated by comparisons with the RBI’s successful 2013 FCNR scheme. However, current conditions are markedly different. Higher US interest rates and attractive dollar-denominated investment options have reduced the relative appeal of FCNR deposits for NRIs. Barclays also noted that implementation challenges around leveraged structures and GIFT City arrangements may have slowed participation.Despite weaker-than-expected FCNR inflows, Barclays remains optimistic that RBI measures will help improve India’s balance of payments position. However, the report warns that renewed geopolitical tensions in the Middle East, rising crude oil prices and strong importer demand for dollars are likely to keep the rupee under pressure, with the bank continuing to expect gradual depreciation in the currency.Published on July 16, 2026
