RBI reforms may unlock $50 billion capital inflow for banks

RBI’s recent liquidity measures and regulatory reforms could help India’s banking sector attract nearly $50 billion in capital, strengthening liquidity and capital buffers. A Uniqus Consultech report said FCNR(B) deposits and policy changes have boosted foreign currency inflows

New Delhi: India’s banking sector could attract nearly $50 billion due to the Reserve Bank of India’s recent liquidity measures and regulatory changes, potentially strengthening capital buffers and liquidity, a report said on Friday.

The report from consulting company Uniqus Consultech said banks have already mobilised $36.7 billion under the RBI’s FCNR(B) deposit scheme and industry estimates suggest inflows could approach $50 billion before the special window closes.

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“Indian banks are entering a new phase of regulatory transformation with the Reserve Bank of India (RBI) advancing reforms across liquidity, credit risk, capital adequacy, customer conduct, and artificial intelligence governance,” the report said.

The agency said the FCNR(B) swap facility and the temporary removal of NRI deposit rate ceilings have made foreign currency deposits more attractive by reducing hedging costs and enabling banks to offer materially higher rates.

“The RBI’s latest actions indicate that Indian banking regulation is moving beyond traditional prudential oversight toward an integrated framework covering capital, risk, customer outcomes, and technology governance,” said Sagar Lakhani, Partner, Uniqus Consultech.

“While liquidity-support measures such as the FCNR(B) swap facility are attracting substantial foreign capital, the simultaneous introduction of forward-looking credit-risk provisioning and AI governance requirements reflects the regulator’s focus on building a more resilient and future-ready banking sector,” Lakhani said.

Banks that successfully align capital planning, risk management, and technology governance will be best positioned to navigate this transition, he forecasted.

The transition to the ECL framework and revised Basel III credit-risk norms represents one of the most significant shifts in banking regulation in recent years, the report said.

The reforms prompted banks to reassess how they price loans, allocate capital, measure profitability, and manage portfolio risk.

Another report said that India’s capital account surplus is now expected to increase to approximately $108 billion, compared with a surplus of just $2 billion in the previous year.

The report added that the BoP is forecast to improve to a $64 billion surplus in FY27 from deficits of $23.6 billion in FY26 and $5 billion in FY25.