New Delhi – The Indian government has announced a comprehensive push to shore up foreign exchange reserves as the rupee faces heightened volatility. Reserves, which stood at roughly $728 billion in February, have slipped to about $682 billion by the end of May, prompting the Reserve Bank of India (RBI) to dip into its own reserves to support the currency amid global uncertainty.

Why the urgency?

The backdrop includes a volatile West‑Asia conflict that has driven crude oil prices higher. As one of the world’s largest oil importers, India’s dollar demand has surged. Simultaneously, foreign investors have been pulling out of Indian equity markets, foreign direct investment (FDI) inflows have slowed, and remittances from Gulf nations have weakened due to the regional turmoil. Adding to the strain is a sharp decline in NRI dollar deposits, which fell from roughly $7 billion in FY‑25 to less than $1 billion in FY‑26.

Three strategic channels

The policy blueprint targets three proven avenues for foreign currency inflow:

• FCNR(B) deposits – Fixed‑deposit accounts that NRIs can open with Indian banks in foreign currencies, mainly USD. Because both principal and interest are repaid in the same foreign currency, depositors avoid exchange‑rate risk, and the funds directly augment banks’ foreign‑currency holdings.
• Overseas Foreign Currency Bonds (OFCBs) – Bonds issued by Indian banks and financial institutions in international markets to raise foreign‑currency capital from global investors. The proceeds flow back into India, bolstering forex receipts.
• External Commercial Borrowings (ECBs) – Loans that Indian corporates and institutions obtain from overseas banks, lenders, or global bond markets. These borrowings bring foreign currency into the country and are typically used for expansion, cap‑ex, or debt refinancing.

Next steps

Sources indicate that Finance Minister Nirmala Sitharaman will soon convene a meeting with public‑sector banks, IDBI Bank, and other public financial institutions. The agenda will likely cover regulatory tweaks, incentive structures, and risk‑mitigation measures for each of the three channels. Experts argue that a coordinated push could reverse the recent reserve decline, easing pressure on the rupee and restoring confidence among foreign investors.

Beyond immediate market stabilization, the initiative signals a longer‑term vision: positioning India as a resilient destination for global capital, which is essential for sustained economic growth.