India bank deposits surge, capital inflows lift Q1 FY27 outlook

Overall deposits in India's banking system rose by about Rs 7 lakh crore for the fortnight ended 30 June 2026, marking the third‑largest fortnightly increase in 29 years. SBI Research attributes the surge to buoyant capital flows, including an estimated $15 billion net inflow from FCNR(B) deposits, external commercial borrowings and overseas foreign‑currency borrowings, and $7 billion of foreign‑institutional‑investor inflows.

RBI foreign‑currency reserves grew by $4.4 billion to $545.6 billion. Commercial paper issuance jumped 19% year‑on‑year to Rs 5.38 lakh crore, and bank credit expanded to Rs 5.6 lakh crore, up from Rs 2.4 lakh crore a year earlier. The top CP‑issuing sectors—power, real estate and steel—account for roughly 69 % of new project announcements. Lower crude oil prices, expected at $80 per barrel, are projected to save $30‑35 billion on India's oil import bill. The rupee outlook remains positive despite a modest depreciation, and tightening yield spreads suggest easing funding conditions for corporate borrowing and project execution in the coming months.