India’s forex reserves rose by a record $44.9 billion in a week, reaching $785.7 billion. Reserves have risen by more than $100 billion since June 5
The concessional swap scheme drew $127 billion through the FCNR(B) window, showing India can mobilise substantial foreign funds in a short period
The inflows strengthen India’s external position, but they are not a substitute for durable, non-debt capital flows needed to supplement domestic savings
The surge in deposits has flooded banks with liquidity. RBI efforts to absorb it have had limited impact, while bond sales pushed the 10-year yield above 7%
Excess liquidity has pulled the weighted average call rate below the standing deposit facility rate, effectively easing monetary conditions even as inflation may warrant caution
Banks now have greater room to lend as investment improves. But pressure to deploy surplus funds must not weaken credit standards or undo years of balance-sheet repair