World Bank Executive Director Neelkanth Mishra has dismissed concerns about India's ability to repay foreign currency non-resident (bank) FCNR(B) deposits when they mature in five years. Speaking in an interview with a business channel, Mishra emphasized that 'there's no reason why this should not work again' if global financing conditions remain unfavorable. The facility currently provides India with reasonably cheap capital at 6.5-7% interest, with Mishra noting that if conditions tighten when deposits mature, the country can issue another FCNR(B). This provides India with significant flexibility to manage its foreign currency requirements without immediate repayment pressure.
India's special USD-INR forex swap facility has drawn $136.4 billion in foreign-currency inflows as of August 31, 2026, with FCNR(B) deposits accounting for 93% of that amount. FCNR(B) holdings currently stand at $127.2 billion, while overseas foreign-currency borrowings contributed $5.26 billion and external commercial borrowings $3.89 billion. Mishra described the latest FCNR(B) inflows as a 'bazooka' that provides India with 1-1.5 years to manage its balance of payments. The facility has now seen inflows of $127.2 billion as of August 31, more than double the $65.4 billion recorded on August 21, with total foreign exchange mobilization crossing $136 billion.
Mishra explained that the current account deficit needs to be viewed as a savings-investment gap, rather than an indication of economic weakness. He emphasized that 'every single dollar flow is a liability' irrespective of the source, whether FDI, portfolio investment, or other channels. The biggest concern currently is how the country uses foreign capital, noting that India needs to worry about how it uses external capital rather than the overall debt position. The comments come amid India's special USD-INR forex swap facility drawing $136.4 billion in foreign-currency inflows, with Mishra noting that from an external debt to GDP perspective, India is a very healthy economy that is growing fast.
Mishra emphasized that the additional breathing room should be used by policymakers to rethink the level of current account deficit India wants to run and the forms of capital it should rely on to finance growth. He pointed to recent steps to ease restrictions on foreign portfolio investment (FPI) disclosures and attract more FPI bond flows as important measures. As reported by Zee News, Mishra stated that 'This gets us cheap capital to finance our growth, but perhaps more is necessary. So it buys us time, and if we are lucky, in two years' time, the dollar is starting to fall, and then we wouldn't have this problem for a while.' He noted that the Indian government's remarkable fiscal discipline contrasts with developed markets where yields are rising, creating a favorable capital flow gradient for India.
Mishra described FCNR(B) as another source of deposit, noting that the country is getting it at 6.5% to 7% which is reasonably cheap capital. He suggested that if three years later it needs to go back and the global environment is still not conducive, India can issue another FCNR(B). As reported by Zee News, Mishra explained that 'So, FCNR(B) is another source of deposit. You're getting it at 6 and a half, 7% which is, I think, reasonably cheap capital,' adding that the facility provides a flexible mechanism for managing foreign currency requirements while maintaining cost-effective access to international capital markets.
