FCNR(B) inflow to top $80bn could cushion India’s widening current‑account gap

New Delhi, Aug 17 — According to a new briefing by Bank of America Securities, the FCNR(B) deposit scheme is on track to generate more than $80 billion in foreign‑exchange inflows, offering a buffer to India’s expanding current‑account deficit.

The initial benchmark of $70 billion has been superseded by a surge in commitments after the programme’s launch. The analysts widened their outlook, citing “stronger than expected flow” as the catalyst.

The RBI’s decision to bring forward the deadline for the zero‑cost hedging option—from 30 September to 31 August—has reduced the window for banks to leverage the benefit, yet the fundraising pace has not faltered.

Between 8 June and 13 August, banks amassed $52.3 billion via FCNR(B) deposits, indicating robust participation from overseas Indian investors and global capital pools.

Parallel foreign‑exchange receipts include $1.7 billion from ECB swap facilities and $2.8 billion from authorised lenders, further strengthening the inflow picture.

The cumulative effect is expected to support India’s payment position as the first‑quarter current‑account gap rose to $3.1 billion, roughly 0.3 percent of GDP, driven primarily by a widening merchandise trade deficit.

Nevertheless, services exports and remittances have alleviated pressure, and analysts project the deficit will stay at a manageable level in the upcoming quarter, especially if export performance improves or remittance flows remain solid.