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Large inflows for the Reserve Bank of India’s Foreign Currency Non-Resident Bank (FCNRB) scheme pushed India’s Balance of Payments (BoP) surplus to a high of $20.8 billion in July, even as the current account deficit (CAD) doubled from a year ago, data released by the Reserve Bank of India (RBI) on Tuesday showed.
In contrast, the year-ago month saw accretion of $0.3 billion to the foreign exchange reserves on a BoP basis. This figure was $2.9 billion in June.
Thanks to large NRI deposits in July, the BoP surplus jumped to $12.7 billion in the first four months of FY27 compared to $4.8 billion in the corresponding period a year ago.
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The FCNR window, which closed on August 31 brought in over $127 billion worth of deposits into India. This is expected to support the BoP while the current account is seen widening on higher energy prices and imports. Forex reserves are also at a record high of $786 billion as of September 4, supporting India’s external position.
The CAD widened to $7 billion in July from $3.2 billion a year ago, as the war-driven spike in global energy prices led to a sharp rise in the merchandise trade deficit. The goods trade deficit rose to $31.7 billion in July from $28.2 billion a year ago, which more than offset higher services trade surplus of $17.6 billion during the reporting month. Net transfers, which include remittances, rose to $13.2 billion in July from $12.6 billion a year ago.
The current account was in a deficit of $11.2 billion in April-July, up from $6.6 billion a year ago.
The current account is likely to remain under some stress in the near term with crude oil prices surging past $100 per barrel and pushing India’s merchandise trade deficit higher. Notably, India’s merchandise trade deficit narrowed to $26.9 billion in August from $27.2 billion a year ago, data released by the commerce ministry on Tuesday showed.
The capital account was in a surplus of $27.7 billion in July and $ 23.9 billion April-July, thanks to the high NRI deposits. In July 2025, the capital account surplus was just $3.5 billion.
Net NRI deposits rose in July to $33.5 billion from $1 billion a year ago. This led to net banking capital rising to $18.4 billion in July from $6 billion a year ago.
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Along with a jump in NRI deposits, higher foreign direct investment (FDI) and foreign portfolio inflows also added to the capital account surplus in July.
Net foreign portfolio investment (FPI) inflows rose to $4.1 billion in July, against net outflows of $2.5 billion a year ago. In April-July, net FPI outflows rose to $5.5 billion from $0.9 billion a year ago.
Net FDI inflows jumped to $7.3 billion in July from $4.5 billion a year ago. In April-July, net FDI inflows increased to $13.4 billion from $9.7 billion in the corresponding period a year ago.
External Commercial Borrowings (ECB) saw outflows of $2.3 billion in July, against inflows of $1.4 billion a year ago.
TOPICSCADThis article was first uploaded on September fifteen, twenty twenty-six, at fifty-three minutes past eleven in the night. © The Indian Express (P) Ltd