India's bank deposits rise by Rs 7 lakh crore: Report
New Delhi, July 11
Overall deposits in India's banking system jumped by around Rs 7 lakh crore for the fortnight ended June 30, 2026, marking the third‑highest fortnightly growth in 29 years, a report said on Saturday.
The report from State Bank of India said the surge reflected buoyant capital flows aided by recent Reserve Bank of India and government measures.
Further, commercial paper and bank credit have expanded indicating that economic activity has surprised on the upside in Q1FY27.
Netting out quarter‑end mobilisation, the bank estimated that jump in capital flows could be about $15 billion, driven in part by renewed Foreign Currency Non-Resident (Bank) [FCNR(B)] deposits, External Commercial Borrowings (ECBs), and Overseas Foreign Currency Borrowings (OFCBs) inflows.
India has also received $7 billion in FII inflows since the measures announced by the government to bring the foreign inflows and boost the rupee.
"Separately, RBI foreign currency reserves increased by $4.4 billion during the fortnight, indicating the desire of RBI to also recoup foreign exchange reserves," the report said.
Long tenor G-sec yields rallied faster than corporate bond yields in May and June, supported by foreign inflows and stronger sovereign bond demand, with corporate yields being sticky amid continued liquidity demand, credit and duration premium demand by investors.
The report noted three‑year AAA bonds saw better demand as issuers shifted partly to commercial paper, bank loans and short‑tenor funding.
Commercial paper issuances increased in Q1FY27 with June issuances at 55-month high, and incremental bank credit showed higher growth.
The rupee appreciated about 2.2 per cent till June‑end from its low of Rs 96.8 per USD on May 20, 2026, though recent geopolitical tensions and rising Brent crude pushed the currency down about 0.4 per cent.
The report said the outlook for INR remains positive, with average crude oil price for India's basket now expected at $80 or lower, leading to potential savings of at least $30 to $35 billion in the oil import bill.
— IANS
Reader Comments
Impressive growth! But I'm curious about the sustainability of these inflows. With global geopolitical tensions and oil prices rising, how long can we maintain this momentum? The report mentions Brent crude pushing the rupee down slightly—that's a real concern.
Rs 7 lakh crore! That's massive. I'm glad FII inflows are picking up, but we need to ensure these are long-term investments, not just quick money. The RBI's decision to recoup forex reserves is smart—gives us a cushion against global shocks. Hope the rupee stays strong. 👍
The numbers look good, but let's not get too excited. A lot of this is likely quarter-end window dressing by banks to meet targets. Real economic activity growth needs to be sustained beyond Q1. Also, commercial paper issuances at 55-month high suggests corporates are still borrowing short-term—not a great sign for long-term confidence.
Interesting data point: $15 billion in capital flows net of quarter-end. That's significant. I'm particularly encouraged by the FCNR(B) deposits—non-resident Indians are voting with their money. But we must watch the oil import bill closely; $30-35 billion savings is optimistic if Brent stays above $80. Still, overall a positive sign for India's economic resilience.
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