Bank of Baroda successfully mobilised $8 billion through the RBI's Foreign Currency Non-Resident (Bank) deposits under the concessional swap scheme, significantly exceeding its initial target of $4-5 billion. According to Business Standard, a senior bank official confirmed the strong response to the scheme, stating "We saw a strong response to the scheme, and it is a good success. The bank has raised $8 billion through FCNR(B). We are yet to decide where to deploy these funds." The sizeable mobilisation makes Bank of Baroda one of the major beneficiaries of the special window, which was introduced in June to boost foreign currency inflows amid pressure on the rupee. The central bank had initially made the facility available until the end of September, but subsequently shortened the window by a month following the strong response.
Bank of Baroda raised its growth forecast for financial year 2026-27 (FY27) to 7-7.2 per cent from 6.6-6.8 per cent estimated in July, driven by robust first-quarter performance. According to reports from Business Standard, the revision comes after Q1FY27 GDP grew 7.8 per cent, up from 6.9 per cent a year earlier, with gross value added (GVA) rising 8.2 per cent. Private consumption expanded 9.9 per cent and investment 20 per cent, signaling strong domestic fundamentals despite volatile global conditions.
The bank highlighted significant improvements in India's external position, with total capital inflows near $136 billion through the RBI's FCNR(B) window. As reported by Business Standard, Madan Sabnavis, chief economist at Bank of Baroda, noted that none of them really expected what they have seen today of 130-plus billion dollars. The team now expects a balance-of-payments surplus of $65-75 billion and sees the external position as "very healthy," though it kept its current account deficit forecast at 1-1.25 per cent.
When the FCNR(B) window closed on August 31, banks had mobilised $127.2 billion in total deposits. Among banks that have announced their mobilisation figures, ICICI Bank had raised $17.9 billion, while RBL Bank and IDFC First Bank had mobilised $3.4 billion and $3.6 billion, respectively. Bank of Baroda entered the mobilisation exercise with a strong liquidity position, with its liquidity coverage ratio at 126.94 per cent during April-June, well above the regulatory requirement. The large FCNR(B) mobilisation could provide the bank with additional funding flexibility, even as the bank is yet to determine how the funds raised through the special window will be deployed.
Bank of Baroda maintained its CPI projection at roughly 5-5.2 per cent but warned of dual inflation threats. According to Business Standard, Sonal Badhan, Bank of Baroda economist, warned that inflation is facing dual threat and upside risk — from a weak monsoon squeezing farm output and from oil, now back near $98 a barrel after renewed West Asia tensions. The bank expects core inflation to continue increasing as companies have yet to pass through higher input costs.
The bank flagged a wider fiscal gap, with the expected number around 4.5-4.6 per cent of GDP against the budgeted 4.3 per cent. As reported by Business Standard, this increase is attributed to a ballooning fertiliser subsidy bill and weaker dividends from oil marketing companies. The team expects the fiscal deficit to exceed budgeted targets due to these additional pressures.
