Mumbai: Banking system deposits surged by nearly Rs 7 lakh crore during the fortnight ended June 30, 2026, recording the third-highest fortnightly increase in the past 29 years, according to a report by SBI Research.

The report said total deposits increased by Rs 6.97 lakh crore during the period, driven by strong quarter-end deposit mobilisation and a rise in foreign capital inflows following recent government measures aimed at attracting overseas investments and supporting the rupee.

Quarter-end mobilisation boosts deposits

SBI Research estimated that around Rs 3.5 lakh crore to Rs 4 lakh crore of the deposit growth came from banks’ quarter-end efforts to mobilise deposits.

The remaining increase was attributed to a potential rise in foreign capital inflows through Foreign Currency Non-Resident (Bank) [FCNR(B)] deposits, External Commercial Borrowings (ECB) and Overseas Foreign Currency Borrowings (OFCB).

According to the report, these inflows significantly strengthened the banking system’s liquidity position during the fortnight.

Foreign inflows support banking system

SBI Research said India has received nearly $7 billion in Foreign Institutional Investor (FII) inflows since the government announced measures to encourage foreign investments and strengthen the rupee.

The report also noted that cumulative inflows under the Fully Accessible Route (FAR) for government debt stood at $2.7 billion during the same period.

After adjusting for normal deposit growth trends, SBI Research estimated that the overall capital inflows could be around $15 billion, with FCNR(B) deposits witnessing a notable increase.

Meanwhile, the Reserve Bank of India’s foreign exchange reserves rose by $4.4 billion during the fortnight, reflecting the central bank’s efforts to rebuild its forex reserves.

Credit growth remains strong

The report highlighted that commercial paper (CP) issuances and bank lending continued to gain momentum during the first quarter of FY27, indicating stronger-than-expected economic activity.

Commercial paper issuances reached a 55-month high in June, while incremental bank credit increased to Rs 5.6 lakh crore in Q1 FY27, more than doubling from Rs 2.4 lakh crore recorded during the corresponding period last year.

According to SBI Research, sectors witnessing higher commercial paper issuances also reported stronger bank credit growth. Together, these sectors accounted for nearly 69% of all new project announcements during the first quarter of FY27.

Liquidity expected to improve

The report noted that banks had recently relied on raising funds through Certificates of Deposit (CDs) to meet liquidity requirements.

However, with the sharp increase in deposits during the fortnight, SBI Research expects this trend to reverse as liquidity conditions improve across the banking system.

The stronger deposit base is also expected to support lending activity while reducing banks’ dependence on short-term market borrowings.

Conclusion

The nearly Rs 7 lakh crore rise in bank deposits marks one of the strongest fortnightly increases in nearly three decades, reflecting a combination of robust quarter-end deposit mobilisation, improving foreign capital inflows and strengthening liquidity conditions. The report suggests that these trends could provide further support to credit growth and economic activity in the coming months.