India’s current account deficit (CAD) is projected to remain between 1.5% and 1.7% of GDP in FY27, but recent policy measures introduced by the Reserve Bank of India (RBI) could significantly strengthen the country’s external sector and help achieve a balance of payments (BoP) surplus, according to SBI Research.
The report stated that the RBI’s policy actions announced in February and June 2026 are part of a coordinated strategy aimed at stabilizing the rupee, attracting long-term foreign capital, deepening domestic debt markets, and easing access to external funding.
While India is expected to continue recording a current account deficit in FY27, SBI Research believes that the gap can be comfortably financed through fresh foreign currency inflows generated by the RBI’s latest initiatives.
The report estimates that India’s overall balance of payments could register a surplus of USD 5-10 billion in FY27, a significant improvement compared to its earlier projection of a USD 65-70 billion deficit. At the same time, the current account deficit is expected to remain within the range of 1.5-1.7% of GDP.
According to the report, total foreign capital inflows through various channels could reach USD 55-65 billion during FY27.
A major share of these inflows, around USD 40-45 billion, is expected to come through Foreign Currency Non-Resident (Bank) [FCNR(B)] deposits. Banks are likely to attract deposits by offering interest rates in the range of 5.5-6%.
The report highlighted that the RBI’s decision to exempt fresh FCNR(B) deposits from Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) requirements, along with bearing hedging costs, has made these deposits more attractive for overseas investors.
Additionally, the ECB/OFCB swap window is expected to bring in another USD 15-20 billion by encouraging foreign currency borrowings and improving dollar liquidity in the financial system.
SBI Research believes these inflows could substantially improve India’s external account position, strengthen the RBI’s foreign exchange reserves, and enhance its ability to manage volatility in the currency market.
The report also noted that higher foreign inflows may improve liquidity in the banking system. It projects banking sector deposit growth of around 14.5-15% in FY27, compared with anticipated credit growth of 16%, helping reduce the credit-deposit gap.
Earlier this week, the RBI announced that fresh FCNR(B) deposits raised by banks under the US Dollar-Rupee swap facility would be exempt from CRR and SLR requirements. The exemption applies to deposits with maturities ranging from three to five years mobilized up to September 30, 2026.
Separate notifications were issued for commercial banks, small finance banks, regional rural banks, and rural cooperative banks to facilitate the scheme.
Overall, SBI Research expects stronger capital inflows, improved foreign exchange reserves, and a healthier balance of payments position to support India’s macroeconomic stability in FY27 despite the persistence of a current account deficit.
