India's overall balance of payments (BoP) recorded a surplus of USD 45.4 billion in August 2026, compared with a deficit of USD 5.6 billion in the corresponding month last year, driven by a sharp increase in foreign capital inflows, particularly deposits from non-resident Indians (NRIs), according to preliminary data released by the Reserve Bank of India (RBI) on Thursday.
The improvement came despite the country's current account remaining in deficit, indicating that substantial capital inflows helped offset pressures arising from merchandise trade and other external transactions. The overall BoP surplus more than doubled from USD 20.8 billion in July to USD 45.4 billion in August, reflecting the impact of measures introduced by the central bank to attract foreign currency inflows and strengthen India's external financial position.
๐ก๐ฅ๐ ๐ฑ๐ฒ๐ฝ๐ผ๐๐ถ๐๐ ๐ฑ๐ฟ๐ถ๐๐ฒ ๐ฐ๐ฎ๐ฝ๐ถ๐๐ฎ๐น ๐ถ๐ป๐ณ๐น๐ผ๐๐
A major contributor to the improvement was a surge in banking capital inflows, which reached USD 64.7 billion in August, against an outflow of USD 4.7 billion in August 2025. Within this category, net NRI deposits jumped to USD 83 billion from USD 1 billion a year earlier, providing significant support to the country's external account.
The increase followed RBI measures introduced earlier this year to encourage foreign currency deposits from overseas Indians. These included a special Foreign Currency Non-Resident Bank deposit window aimed at attracting additional foreign exchange resources. The window, which closed on August 31, attracted approximately USD 133 billion in deposits, according to reports.
The capital account consequently registered a surplus of USD 50.6 billion in August, compared with USD 0.5 billion in the same month last year. The substantial increase in inflows helped strengthen the overall balance of payments despite continued pressure on the current account.
๐๐๐ฟ๐ฟ๐ฒ๐ป๐ ๐ฎ๐ฐ๐ฐ๐ผ๐๐ป๐ ๐ฑ๐ฒ๐ณ๐ถ๐ฐ๐ถ๐ ๐ป๐ฎ๐ฟ๐ฟ๐ผ๐๐
India's current account deficit narrowed to USD 5.2 billion in August from USD 6.1 billion a year earlier, supported by a reduction in the merchandise trade deficit and an improvement in net services receipts.
The merchandise trade deficit declined to USD 26.6 billion from USD 27.6 billion in August 2025. Merchandise exports increased to USD 44.7 billion from USD 35.1 billion, while imports rose to USD 71.3 billion from USD 62.7 billion during the same period.
The services sector continued to provide support to the external account, with the services trade surplus increasing to USD 16.5 billion from USD 15.6 billion a year ago. Services exports rose to USD 35.5 billion from USD 31.2 billion, while services imports increased to USD 18.9 billion from USD 15.6 billion.
Net transfers, including remittances, increased to USD 12.8 billion from USD 12.2 billion. However, the deficit in the income account widened to USD 8 billion from USD 6.3 billion, partially offsetting the improvement in merchandise and services trade.
๐๐ผ๐ฟ๐ฒ๐ถ๐ด๐ป ๐ถ๐ป๐๐ฒ๐๐๐บ๐ฒ๐ป๐ ๐๐๐ฟ๐ป๐ ๐ฝ๐ผ๐๐ถ๐๐ถ๐๐ฒ
Foreign investment flows also improved during August. Net foreign direct investment (FDI) stood at USD 3.3 billion, compared with a net outflow of USD 0.1 billion in August 2025, indicating a recovery in direct investment flows during the month.
Foreign portfolio investment (FPI) registered net inflows of USD 1.7 billion, reversing net outflows of USD 2.6 billion in the corresponding period last year. The positive investment flows added to the capital account surplus, although external commercial borrowings recorded a substantial net outflow of USD 22.4 billion, compared with an outflow of USD 0.1 billion a year earlier.
The RBI data showed that the sharp rise in banking capital and NRI deposits was the dominant factor behind the overall improvement in the country's external position.
๐๐ฝ๐ฟ๐ถ๐น-๐๐๐ด๐๐๐ ๐๐๐ฟ๐ฝ๐น๐๐ ๐ฟ๐ฒ๐ฎ๐ฐ๐ต๐ฒ๐ ๐จ๐ฆ๐ ๐ฑ๐ด ๐ฏ๐ถ๐น๐น๐ถ๐ผ๐ป
For the April-August 2026 period, India's overall balance of payments recorded a cumulative surplus of USD 58 billion, compared with a deficit of USD 0.8 billion in the corresponding period of the previous financial year.
However, the current account deficit widened to USD 18.3 billion during the five-month period from USD 12.8 billion a year earlier, reflecting continued pressure from merchandise imports.
The merchandise trade deficit increased to USD 146 billion during April-August from USD 124.7 billion in the corresponding period last year. The services trade surplus rose to USD 85.8 billion from USD 79.9 billion, while net transfers increased to USD 66.8 billion from USD 55.6 billion.
The capital account recorded a cumulative surplus of USD 76.3 billion during April-August, supported by substantial foreign currency inflows. Net NRI deposits stood at USD 119.2 billion during the period, compared with USD 5.6 billion a year earlier.
The figures highlight the importance of capital inflows in supporting India's external financial position. While the sharp increase in foreign currency deposits helped generate a substantial balance of payments surplus in August, the widening cumulative current account deficit indicates that pressures from merchandise trade continue to pose challenges.
The sustainability of the improvement will depend on continued capital inflows, export performance, import demand and global financial conditions in the coming months.