Reserve Bank of India rejects cost concerns over foreign-currency deposit drive

India’s central bank has a message for critics of its massive foreign-currency deposit program: the math works in our favor. RBI Governor Sanjay Malhotra said the Foreign Currency Non-Resident (Bank) scheme, known as FCNR(B), generates net additional revenue for the central bank, directly countering analyst warnings that the program could cost India $10.6 billion over five years in hedging expenses alone. A deposit drive that wildly overshot expectations When the RBI launched the FCNR(B) scheme in early June 2026, internal projections pegged inflows somewhere between $35 billion and $55 billion. Total inflows exceeded $136 billion as of August 2026, with banks raising $127 billion specifically through FCNR(B) deposits. To put that in perspective, India’s entire forex reserves prior to the program sat around $700 billion to $730 billion. The scheme effectively added roughly 18% to the country’s dollar cushion in a matter of months. The program targeted India’s sprawling diaspora, offering competitive interest rates of 6% to 7% on long-term deposits. That’s nearly double the roughly 3.5% rates that had been standard before the scheme launched. The RBI absorbed the full hedging costs ...