We are looking at a possible shift from an external gap to a surplus. SBI has done the numbers and thinks the RBI's new approach will pull in as much as USD 55-65 billion in the coming year. In its Ecowrap, the bank makes the case that this is how you stabilise the currency and turn the BoP around for FY27.
From SBI’s angle, it is about having a firm hold on foreign currency without touching interest rates at home. Do that and you ease some of the friction in funding, put some heft in the debt market and make a better offer to long-duration capital when risk is hard to come by.
SBI’s call on flows and the BoP
There is a rethinking of the external math for FY27. The report now has the overall balance of payments at a USD 5 to 10 billion surplus – a far cry from the USD 65-70 billion deficit we were told to expect before.
The current account deficit, they say, will come in at 1.5-1.7 per cent of GDP. It all comes down to FX channels that are quick and don’t cost the system too much to run.
What SBI is forecasting:
– USD 55-65 billion in the door this fiscal
– 14.5-15 per cent for deposit growth in FY27
– 16 per credit growth
– A BoP in the plus for USD 5 to 10 billion
– (You had us at a USD 65-70 billion hole before)
– CAD of 1.5-1.7 per cent of GDP
RBI’s coordinated strategy
If you read Ecowrap, you have to look at what the RBI did in February and June 2026 as one and the same. The February side of things with ECBs was about building out the market; in June they made it a point to get some fresh foreign currency in to hold the line on the rupee.
Then after the June policy, the central bank put out some concessional forex swap options to nudge public sector undertakings into external commercial borrowings. They also let banks in on a window for 3-5-year FCNR(B) deposits, with a dollar-rupee swap to back any new inflows.
For the FCNR(B) you are talking three to five years on the tenor. It starts Monday and you can use it through to October 16, 2026.
Impact on banks and rates
SBI figures these inflows will see system deposit growth in FY27 hit 14.5-15 per cent or so, with credit running at 16. Once you factor in the rules, the report says that should close the credit deposit gap by some Rs 1 lakh crore.
Take the pressure off on funding and the term structure of rates can go lower. SBI points to FY14 as an example: when you have FCNR(B) moving the needle, you can get deposit and credit growth to run in lockstep.
Rupee stability and what to watch
SBI sees the June moves as a way to put the rupee on an even keel without hiking rates and to make it less of a hassle to get external funding. The idea is to bring in some solid foreign capital and add some depth to the local debt market.
A better BoP is at the heart of it. That is where you track everything coming in and going out, from trade and remittances to investment and borrowing.
Now it is a matter of how well the ECB and FCNR(B) deposits are taken up. If the numbers hold to SBI’s estimate, you get a stronger position on the outside while banks have a bit more room to manoeuvre on their liabilities and can work with lower market rates.
