RBI measures may draw $60-70bn, support rupee in FY27

Introduction: why the RBI’s June package matters

India’s external sector outlook for FY27 has come into focus after a coordinated set of steps by the Reserve Bank of India (RBI) and the central government to attract foreign capital. Multiple research notes cited in recent reports suggest the measures could bring sizable foreign exchange inflows, ease pressure on the rupee, and improve the balance of payments (BoP) position. SBI’s research arm, in its Ecowrap report, said the RBI’s measures are likely to help India attract USD 55-65 billion of inflows in the current fiscal. It also projected that the overall BoP could shift into a USD 5-10 billion surplus for FY27, far better than its earlier view of a USD 65-70 billion deficit.

The policy backdrop includes concerns around foreign exchange volatility, oil price risks, and geopolitical uncertainty, with the package positioned as a way to strengthen external financing conditions. Analysts and economists quoted across reports have differed on the exact inflow quantum, but many estimates cluster between USD 30 billion and USD 70 billion.

What the RBI announced alongside the June policy review

The RBI’s package was announced alongside the June monetary policy review and included measures aimed at boosting dollar inflows and reducing hedging costs. Key steps referenced in the reports include:

• Special swap windows for Foreign Currency Non-Resident Bank (FCNR(B)) deposits.
• A concessional foreign-exchange swap facility to encourage external commercial borrowings (ECBs) by public sector undertakings (PSUs).
• Expansion of the Fully Accessible Route (FAR) for government securities.
• Easing of some foreign investment norms and other steps to encourage capital inflows.
• A proposal to restore the export proceeds realisation period to nine months from the current 14 months.

RBI Governor Sanjay Malhotra said the measures are expected to strengthen India’s balance of payments and support capital inflows.

How much inflow could the measures attract

Estimates varied by institution and source, but the direction was broadly consistent: higher capital inflows and a smaller external financing gap.

• Barclays said the measures could attract USD 25-30 billion through FCNR(B) deposits and another USD 15-20 billion through ECBs raised by PSUs, with additional inflows into government securities through FAR. Barclays said this could take total inflows to USD 60-70 billion.
• Economists cited in separate reports said the steps could generate close to USD 30-50 billion.
• DBS said cumulative incremental inflows might at least amount to USD 50-60 billion, with room for further upside.
• YES Bank’s chief economist Indranil Pan was cited as estimating USD 35-45 billion as a reasonable range.

While the exact breakdown will depend on take-up and timing, the stated objective is to narrow the projected BoP gap and slow any further depletion of reserves.

BoP forecasts: sharp revisions after the package

Several forecasts shifted materially after the RBI’s announcement.

SBI’s Ecowrap report put the overall BoP in a USD 5-10 billion surplus range for FY27 and said the current account deficit (CAD) could be around 1.5-1.7% of GDP. This was described as well above its earlier estimate of a USD 65-70 billion deficit.

Barclays revised its FY27 BoP forecast to a USD 20 billion surplus from an earlier projected deficit of USD 50 billion. It also projected a capital account surplus of USD 105 billion expected to finance a current account deficit estimated at USD 85 billion.

HSBC said the combined measures by the government and RBI could improve the BoP by more than USD 30 billion in the short run, by narrowing the CAD and raising capital inflows.

FCNR(B) swap window: removing hedging costs

A key feature highlighted in the reports is the FCNR(B) swap facility, available for deposits mobilised until September 30. Under this mechanism, banks can swap foreign currency deposits with the RBI at par, effectively removing hedging costs.

This is designed to make three- to five-year FCNR(B) deposits more attractive for mobilising foreign currency. The RBI also said it will bear the full hedging cost for authorised dealer banks for raising fresh three- to five-year FCNR(B) deposits until September 30, 2026.

By lowering the cost of covering currency risk, the facility aims to improve the economics for banks to bring in foreign currency deposits, which then supports the overall balance of payments.

ECB swap facility for PSUs: targeted external funding support

The concessional forex swap facility for ECBs is another central lever in the package. The RBI said the facility will be available until September 30, 2026, to encourage external commercial borrowings by PSUs.

Barclays estimated USD 15-20 billion in inflows through ECBs raised by PSUs under the new window. By lowering the effective cost of hedging for such borrowing, the measure is intended to draw foreign currency funding during a period when external conditions can tighten quickly.

FAR expansion and bond flows: broadening access to G-secs

The RBI also broadened the FAR, including 15-year, 30-year and 40-year government bonds, subject to an overall limit of 30% of outstanding securities, as referenced in the reports.

Market participants cited in the coverage noted that near-term inflows may be modest, but the change strengthens India’s positioning for inclusion in major global bond indices, including the Bloomberg Aggregate Bond Index. It could also improve access through wider settlement platforms such as Euroclear, as highlighted by an investment officer quoted in the reports.

Government steps referenced in the coverage

Alongside the RBI’s measures, the reports referred to government actions aimed at managing dollar outflows and supporting the rupee. These included steps to boost bond flows, tap the diaspora, encourage foreign currency borrowings, and increase equity investments for non-resident Indians.

Other measures mentioned include adjusting export proceeds timelines and imposing higher duties on gold and silver. Together, these steps were described as part of a coordinated package to attract foreign exchange and stabilise external balances.

FX reserves and forward book: what the numbers indicate

RBI Governor Sanjay Malhotra said India’s foreign exchange reserves stood at USD 682.3 billion as of May 29, providing about 11 months of import cover and covering 89.1% of external debt.

Barclays noted that the RBI’s short dollar forward position is likely to increase sharply as FCNR(B) and ECB-related swaps are executed. The RBI’s net short dollar forward book was estimated at around USD 110-115 billion, compared with USD 95.3 billion in April, and could expand by another USD 40-50 billion as the new facilities gain traction.

The linkage, as described in the reports, is that stronger capital inflows could reduce downside risks to the rupee and potentially reduce the need for monetary tightening to defend the currency.

Key figures at a glance

Market impact: rupee stability and external financing conditions

Across the reports, the near-term market implication is framed around reduced foreign-exchange volatility and improved external financing conditions. Barclays said the measures are expected to ease pressure on the rupee and reduce FX volatility over coming months.

DBS said the steps tick key boxes to spur dollar inflows, revive parts of a 2013-style playbook, help reserves accretion, and stabilise the currency. HSBC also linked the package to a more than USD 30 billion short-run BoP improvement via both a narrower CAD and higher inflows.

The common theme is that if the inflows materialise at the indicated scale, India’s external financing gap for FY27 could shrink substantially.

Analysis: why the package is being watched closely

The policy focus is on the mix of targeted swap facilities and broader market-access measures. By using swap windows for FCNR(B) deposits and PSU ECBs, the RBI is attempting to lower hedging costs in a time-bound manner, which may improve participation without changing the underlying risk appetite permanently.

At the same time, expanding FAR-eligible government bonds widens channels for long-duration bond inflows. The reports also suggest that improved BoP arithmetic can change how markets think about currency risk, reserve drawdowns, and the extent of policy tightening required to defend the rupee.

Still, the reported estimates show uncertainty about the final inflow number and the pace of adoption, which is why institutions have provided ranges rather than a single figure.

Conclusion: next milestones for inflows and policy follow-through

The RBI’s June package and the government’s complementary steps have led to a meaningful re-rating of FY27 BoP expectations, with SBI and Barclays now pointing to possible surpluses rather than deficits. Much will depend on how quickly banks mobilise FCNR(B) deposits and how actively PSUs tap the ECB window before the September 30, 2026 deadline.

Investors will also track any further RBI policy adjustments aimed at promoting exports and attracting capital inflows, as the central bank indicated it would continue to make changes where needed.