NEW DELHI: India’s Balance of Payments (BoP) saw an $8.8 billion surplus in September, mainly because of a high capital account surplus while the current account deficit (CAD) widened, data released by the Reserve Bank of India (RBI) on Friday showed.
In contrast, September 2025 saw foreign exchange reserves deplete $5.6 billion on a BoP basis. The BoP was in a surplus of $45.4 billion in August mainly because of large inflows for the RBI’s Foreign Currency Non-Resident Bank (FCNRB) scheme, which ended in August.
High FCNR (B) inflows led to a BoP surplus of $66.8 billion in the first half of FY27 compared to a $6.4 billion deficit in April-September 2025.
After a large BoP surplus in April-September, India’s external position is seen deteriorating during October-March. Economists project a full-year BoP surplus around $50 billion to $60 billion, suggesting foreign exchange reserves would deplete in the second half of the financial year.
In September, BoP was in surplus despite the current account deficit (CAD) widening to $7.4 billion during the month from $5.2 billion a year ago. In August, the CAD was $5.2 billion.
CAD widened in September mainly because of higher net outgo on income, reflecting investment income on foreign institutional and direct investments.
Net outgo on income rose to $7.6 billion in September from $2.2 billion a year ago, which outweighed the lower goods trade deficit and higher services trade surplus.
The goods trade deficit eased to $30 billion in September from $33.4 billion a year ago, while the services trade surplus rose to $19.2 billion during the reporting month from $18.8 billion a year ago.
Net transfers, which include remittances, eased to $10.9 billion in September from $11.5 billion a year ago. The current account was in a deficit of $25.8 billion in the first six months of FY27, up from $18.0 billion a year ago.
The current account could remain under stress in the near term but the extent depends on crude oil price, which is now below $100 per barrel.
Data released by the commerce ministry of Friday showed that India’s merchandise trade deficit fell 6% year-on-year to $39.9 billion in October from $42.6 billion a year ago.
The capital account was in a $16.2 billion surplus in September against a deficit of $0.4 billion a year ago. The surplus was driven by net banking capital inflows of $22.2 billion, which was sharply higher than $0.7 billion in September 2025.
“The rise in banking capital reflects more than one-year buy-sell swaps rising by $22 billion,” said Gaura Sen Gupta, chief economist at IDFC FIRST Bank. “This has happened due to an accounting practice for FCNR (B) swaps which were done on the last working day of August but were executed at the beginning of September.
These swaps were recorded as sell buy in the August forward book. In September, it was reversed and recorded as buy-sell, resulting in a $22 billion increase in more than one-year buy-sell swaps, even though net NRI inflows were $3.7 billion in September,” Sen Gupta said. Net NRI deposits rose to $3.7 billion in September from $0.4 billion a year ago.
Net foreign direct investment (FDI) outflows rose to $4.9 billion in September compared to outflows of $2.3 billion a year ago. In April-September, net FDI inflows increased to $8.8 billion from $7.4 billion in the corresponding period a year ago.
Net foreign portfolio investment (FPI) outflows rose to $6.7 billion in September from $0.6 billion a year ago. In April-September, net FPI outflows were up at $10.4 billion from $4.1 billion a year ago.
Source: The Financial Express
