RBI sees rupee as undervalued; FCNR(B) inflows cross $32 billion
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📌 Summary:
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RBI Governor Sanjay Malhotra said the central bank's June measures to attract foreign capital drew a strong response — banks mobilised nearly $32 billion, largely through Foreign Currency Non-Resident (Bank), or FCNR(B), deposits
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Government securities (G-secs) attracted more than $7 billion in foreign inflows since the June policy measures
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Malhotra dismissed concerns that the inflows are merely a recycling of existing deposits, and said the RBI has adequate tools to manage the resulting liquidity
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The RBI views the rupee as undervalued; the inflows have strengthened India's external position amid heightened geopolitical uncertainty and volatile global capital flows
🎯 UPSC Relevance: GS3 Economy — external-sector management, exchange-rate policy, capital flows and the RBI's monetary/forex toolkit.
📝 Prelims Facts:
- FCNR(B) = Foreign Currency Non-Resident (Bank) deposit — held in a permitted foreign currency, shielding the NRI depositor from rupee-depreciation risk
- ~$32 billion mobilised (mainly FCNR(B)); over $7 billion of foreign inflows into G-secs since June 2026
- RBI Governor: Sanjay Malhotra
🔑 Key Term: FCNR(B) deposit — a term deposit that NRIs can hold with Indian banks in a permitted foreign currency, insulating them from exchange-rate risk while giving India access to foreign capital.
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