$7 billion FII inflow since rupee-boosting measures: SBI links it to bank deposit surge

India has received $7 billion in foreign institutional investor inflows since the government announced measures to boost foreign inflows and support the rupee, according to a report by Soumya Kanti Ghosh, chief economist at SBI. Cumulative debt inflows under the Fully Accessible Route have added a further $2.7 billion since those measures were introduced.

Ghosh linked these capital flows to a sharp fortnightly surge in Indian bank deposits, which rose by about Rs 7 lakh crore, or 2.7%, in the last fortnight of the first quarter of FY27, taking aggregate deposits to Rs 265.4 lakh crore as on June 30, 2026. Netting out quarter-end deposit mobilisation, the report said the surge also reflects a potential jump in capital flows through channels such as FCNR(B), external commercial borrowings and the Overseas Foreign Currency Borrowing route, with FCNR(B) flows in particular picking up pace.

An informed estimate of the overall scale of these capital flows, after stripping out trend growth, suggests the figure could be as high as $15 billion, according to the report.

The deposit surge has taken year-on-year growth for Q1FY27 to 13.3%, up from 10.1% a year earlier. The jump follows a weak start to the quarter — deposits were actually down Rs 3.9 lakh crore, or 1.5%, from end-March 2026 levels as of the fortnight ended June 15, 2026, before the sharp fortnightly rebound.

Even with the surge, deposit growth continues to lag bank credit growth, which accelerated to 18.6% year-on-year as on June 30, 2026, nearly double the 9.5% growth recorded in June 2025. Bank credit stood at Rs 219.3 lakh crore as of that date.

With credit growth continuing to outstrip deposits, banks have slowed their investments, largely in government securities, which stood at Rs 70.9 lakh crore at the end of the first quarter, with year-on-year growth moderating to 5.8% from 8.7% a year earlier.