India's central bank is letting its overseas deposit program run the full course. Reserve Bank of India (RBI) Governor Sanjay Malhotra said in Mumbai on Aug. 5, 2026 that the bank has no plan to shut the scheme early and expects "good, healthy flows" until it ends at end-September.
"As of now, there is no proposal under consideration to close this scheme prematurely," he said.
The plan, launched in June, lets banks in India offer competitive yields on foreign-currency deposits. The RBI subsidizes the hedging cost, which is the price banks pay to guard against swings in the exchange rate.
That subsidy is what makes the offer attractive to the 35 million Indians living overseas. A cheaper hedging bill means banks can pay better rates without taking on too much extra risk.
There is real money at stake. Bankers and analysts project inflows may surpass $50 billion from diaspora Indians before the scheme closes, and some lenders are already extending credit equal to multiples of the initial deposit at participating banks.
This is not just a bank marketing push. It is central bank policy aimed at attracting foreign currency while the rupee is under pressure against the dollar.
The mechanics help explain why the numbers are moving. A bank that accepts dollars from overseas must hedge the currency risk until the money is repaid or redeployed. By covering part of that hedging cost, the RBI lowers the bank's effective expense, which in turn supports the higher yields offered to depositors. That is the central bank using its balance sheet to steer foreign currency into the system without forcing banks to carry the full exchange-rate risk.
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The money is showing up in official data. The central bank's own figures show non-resident Indians' foreign-currency deposits, known as FCNR(B), totaled $36.72 billion by July 31.
The data only runs through the end of July, so August inflows have not shown up yet. With the program open through end-September, the totals still have time to move.
Add foreign-currency loans from overseas and external commercial borrowings, which are loans Indian firms take from abroad, and the combined total comes to about $41 billion.
State Bank of India, the country's biggest lender, held $13.82 billion of those FCNR(B) deposits as of July 30. That was the largest total among domestic and foreign banks.
Government-owned, private and foreign banks have all stepped up fundraising from overseas Indians. These fundraising efforts are adding to India's foreign-exchange reserves even as the dollar presses on the rupee.
This program sits alongside the money overseas Indians already send home. Inward remittances exceeded $155 billion in India's fiscal 2025-26, and many Indians abroad keep local bank accounts and invest in Indian assets. The deposit scheme gives those existing links a stronger financial incentive to move money through Indian banks.
The scheme also gives the central bank extra firepower, because more foreign-exchange reserves can help steady the rupee when it is under pressure against the dollar. The RBI says it is not chasing a target. Malhotra described the extra rupees these deposits create as "manageable" after the RBI's rate-setting committee, the monetary policy committee, held interest rates steady.
For anyone following India, the timeline is the thing. The program closes at end-September, and Malhotra has ruled out closing it early, so the coming weeks will show how much of the expected money actually lands.
If the inflows come in as bankers and analysts expect, India's reserves get a boost before the program closes. That can help support the rupee and give the central bank more room to manage policy, which matters if you hold Indian stocks, bonds, or any investments that depend on the currency.
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