Money
Reserve Bank of India weekly data shows forex reserves expanding to $785.7 billion, accompanied by robust 19.1% credit growth in scheduled commercial banks.
Key points
- India’s total foreign exchange reserves rose by $44.9 billion in a single week to $785.71 billion as of September 4, 2026.
- Foreign currency assets accounted for the bulk of the surge, jumping $47.5 billion to reach $648.17 billion.
- Scheduled commercial bank credit grew 19.1% year-on-year to ₹223.88 lakh crore as of August 31, 2026.
- Aggregate bank deposits expanded 17.8% year-on-year to ₹278.72 lakh crore, while net systemic liquidity remained in surplus.
India’s foreign exchange reserves surged by $44.9 billion in a single week to reach a massive $785.71 billion as of September 4, 2026, according to the latest statistical supplement released by the Reserve Bank of India (RBI). The record expansion was primarily driven by a substantial jump in foreign currency assets, providing a significant cushion for the Indian rupee and bolstering macro-financial stability amid evolving global market dynamics.
Foreign Exchange Reserves Expand on Sharp Currency Asset Gains
Data from the central bank shows that foreign currency assets—the largest component of overall reserves—climbed by $47.50 billion during the week ended September 4, reaching $648.17 billion (₹61.25 lakh crore). The rise in foreign currency holdings offset a decline in gold reserves, which decreased by $2.59 billion over the same period to stand at $113.82 billion (₹10.75 lakh crore).
Special Drawing Rights (SDRs) dipped slightly by $4 million to $18.81 billion, while India’s reserve position with the International Monetary Fund (IMF) rose by $2 million to $4.92 billion. On a year-on-year basis, India’s total foreign exchange reserves are up by $87.44 billion, underscoring strong foreign capital inflows and active central bank foreign exchange management.
Commercial Bank Credit and Deposit Growth Maintain Strong Momentum
Alongside foreign exchange data, the RBI’s fortnightly data for scheduled commercial banks showed sustained momentum in credit demand and deposit gathering as of August 31, 2026:
- Bank Credit: Total outstanding bank credit grew 19.1% year-on-year to ₹223.88 lakh crore, up from ₹175.41 lakh crore a year earlier. Non-food credit expanded to ₹222.76 lakh crore.
- Aggregate Deposits: Aggregate deposits in scheduled banks grew 17.8% year-on-year to reach ₹278.72 lakh crore, compared to a growth rate of 9.8% in the previous fiscal year period.
- Demand vs Time Deposits: Demand deposits stood at ₹34.49 lakh crore, while time deposits expanded to ₹244.23 lakh crore.
- Money Supply (M3): Total money supply reached ₹332.22 lakh crore as of August 31, recording a year-on-year expansion of 16.7%.
The acceleration in both bank credit and deposit creation points to ongoing domestic economic activity, backed by robust institutional balance sheets and active public participation in formal banking channels.
Systemic Liquidity and Money Supply Trends
The RBI supplement also highlighted persistent surplus liquidity in the domestic banking system. Net liquidity absorption through the central bank’s Liquidity Adjustment Facility (LAF) stood at ₹830,561 crore on September 4, 2026. The central bank absorbed liquidity largely through its Standing Deposit Facility (SDF), which took in ₹228,290 crore, and Variable Rate Reverse Repo (VRRR) operations totaling ₹602,394 crore on that date.
The continued liquidity surplus reflects steady capital inflows and government spending, allowing commercial banks to maintain comfortable funding buffers while expanding their lending books.
What this means for investors
For equity and fixed-income investors in India, a $44.9 billion weekly expansion in foreign exchange reserves significantly enhances the country’s external sector safety net. Robust reserves act as a powerful buffer against global market volatility, helping stabilize the Indian rupee and reducing imported inflation risks. A strong reserve balance also lowers sovereign risk perception, which can support sustained foreign portfolio investment (FPI) flows into Indian stocks and bonds.
The concurrent 19.1% growth in bank credit signals sustained underlying demand for credit across corporate and retail sectors. For banking sector investors, strong credit growth paired with steady deposit expansion suggests expanding interest income potential, provided asset quality remains controlled. However, investors should monitor deposit competition, as banks may need to raise deposit rates to keep pace with rapid lending growth.
Overall, the combination of record currency reserves, liquid domestic banking conditions, and double-digit credit growth reinforces the broader macroeconomic resilience of Indian capital markets heading into the final quarters of the fiscal year.
Frequently asked questions
What caused the jump in India’s forex reserves? The increase was driven primarily by a $47.50 billion surge in foreign currency assets during the week ended September 4, 2026, offsetting a slight decrease in gold holdings.
How rapidly is bank credit growing in India? Bank credit grew 19.1% year-on-year as of August 31, 2026, reaching ₹223.88 lakh crore, driven largely by non-food credit expansion.
What is the current liquidity position in the banking system? The Reserve Bank of India continues to operate in net absorption mode, absorbing over ₹830,000 crore in excess systemic liquidity as of early September 2026.
This article is for information only and is not investment advice. Do your own research or consult a licensed adviser before investing.
Based on information published by Reserve Bank of India (RBI). Source: Reserve Bank of India (RBI). Spotted an error? corrections@moneypuran.com
