India’s banking system witnessed a remarkable surge in deposits during this fortnight ending June 30, 2026, with total deposits increasing by around ₹6.97 lakh crore, and it is the third-largest fortnightly deposit growth during the past 29 years, according to SBI Research.
The high growth in the report is indicative of healthy liquidity conditions, healthy capital flow, and banking activity, and shows the continued resilience of the Indian financial system.
Quarter-End Mobilisation Boosted Deposits
SBI Research estimates that nearly ₹3.5 lakh crore to ₹4 lakh crore of the total deposit growth was driven by quarter-end deposit mobilisation, a period when banks usually attract higher deposits as businesses and institutions adjust their financial positions before quarterly reporting.
The remaining increase is believed to have been supported by higher inflows through:
- Foreign Currency Non-Resident (Bank) [FCNR(B)] deposits.
- External Commercial Borrowings (ECBs).
- Offshore Foreign Currency Borrowings (OFCBs).
These inflows have greatly strengthened liquidity in the banking system.
Strong Foreign Capital Inflows
The report also said India has attracted approximately $7 billion in Foreign Institutional Investor (FII) inflows as a result of measures taken by the Government to encourage overseas investments and support the Indian rupee.
Moreover, the total inflows through the Fully Accessible Route (FAR) for government debt are now $2.7 billion, which is an indication of investor confidence in India’s financial markets.
After accounting for normal trend growth, SBI Research estimates that total capital inflows during the period could be close to $15 billion, with FCNR(B) deposits contributing significantly to the increase.
RBI Forex Reserves Continue to Rise
India’s foreign exchange reserves also witnessed healthy growth during the fortnight.
In fact, RBI's foreign currency reserves increased by $4.4 billion, indicating that the central bank is aggressively rebuilding forex reserves in the wake of rising capital inflows and favourable external conditions.
Higher reserves help to control external shocks and maintain currency stability.
Credit Growth Signals Economic Strength
The report also found encouraging signs of lending activity in the first quarter of FY2026-27.
Incremental bank credit has risen to ₹5.6 lakh crore in Q1 FY27 compared with ₹2.4 lakh crore in the same period last year, indicating that businesses and consumers have more appetite for loans.
Commercial Paper (CP) issuance also increased significantly, with June posting the highest monthly issuance in 55 months.
According to SBI Research, sectors that saw higher commercial paper issuances also experienced stronger bank credit growth and accounted for almost 69% of new project announcements during the quarter.
Liquidity Conditions Likely to Improve
The report observed that banks had recently relied on Certificates of Deposit (CDs) to raise funds due to tighter liquidity conditions.
However, with deposits growing by nearly ₹7 lakh crore in a single fortnight, this would mean that the need for such borrowing would be less.
SBI Research believes the record deposit accretion will help ease liquidity pressure in the banking industry and increase banks’ ability to support credit growth in the coming months.
Positive Outlook for the Banking Sector
The combination of excellent deposit mobilisation, growing credit demand, improved capital flows, and more foreign exchange reserves makes for a positive picture of India’s banking system.
These trends could support sustained economic growth, financial stability, and give banks more room to expand lending in retail, corporate, and infrastructure sectors.
As the financial year progresses, investors and policymakers will closely monitor whether this momentum continues in changing global economic conditions.
Disclaimer: This article is based on findings published in the SBI Research report. The analysis and estimates are subject to change as new economic data becomes available.
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