India's foreign exchange reserves remain above March levels despite a weekly decline; bank deposit and credit growth continues

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India's foreign exchange reserves and banking growth

Highlights

India's total foreign exchange reserves stood at Rs 7,022,417 crore (US$726,027 million) as of 9 October 2026, down Rs 50,694 crore week on week but Rs 468,556 crore higher than in March 2026.
As of 30 September 2026, total deposits of scheduled commercial banks reached Rs 28,395,693 crore and total bank credit stood at Rs 22,994,658 crore, up Rs 4,297,111 crore and Rs 3,733,325 crore year on year, respectively.
Broad money supply (M3) stood at Rs 33,766,475 crore as of 30 September 2026, up 16.9 percent year on year, while the RBI maintained net liquidity absorption from the system throughout the week.

This article was translated from the original. Read the original version by our correspondent here.

Reserve and banking trends in weekly RBI data

Citing the Reserve Bank of India's weekly statistical supplement, the Reserve Bank of India said total foreign exchange reserves stood at Rs 7,022,417 crore, or US$726,027 million, as of 9 October 2026. This is Rs 50,694 crore, or US$8,578 million, lower than the previous week, but Rs 468,556 crore higher than at the end of March 2026 and Rs 833,633 crore higher year on year.

Foreign currency assets stood at Rs 5,780,313 crore and declined by Rs 42,576 crore week on week. Gold stood at Rs 1,016,520 crore, recording a weekly decrease of Rs 8,092 crore, while Special Drawing Rights stood at Rs 179,404 crore and the reserve position in the IMF at Rs 46,181 crore.

According to data on the operations of scheduled commercial banks in India, total deposits reached Rs 28,395,693 crore as of 30 September 2026. This represents an increase of Rs 772,627 crore over the fortnight, Rs 1,517,980 crore so far in the current financial year, and Rs 4,297,111 crore year on year, while total bank credit stood at Rs 22,994,658 crore, showing annual growth of Rs 3,733,325 crore.

Non-food credit stood at Rs 22,898,371 crore and accounted for the bulk of total credit expansion. Food credit stood at Rs 96,286 crore, while borrowings reached Rs 977,556 crore.

Impact on money supply and liquidity

Broad money supply, or M3, stood at Rs 33,766,475 crore as of 30 September 2026. It increased by Rs 699,030 crore over the fortnight, Rs 1,608,621 crore so far in the current financial year, and Rs 4,871,266 crore year on year, equivalent to an annual growth rate of 16.9 percent.

Among the key components of M3, time deposits with banks remained the largest share at Rs 25,541,542 crore, while currency with the public stood at Rs 4,207,251 crore and demand deposits with banks at Rs 3,890,599 crore. On the sources side, bank credit to the commercial sector stood at Rs 23,849,938 crore, while net bank credit to the government reached Rs 9,415,530 crore.

The RBI's liquidity operations table for 5 October to 11 October 2026 shows that net absorption from the system continued every day. On 9 October, net absorption stood at Rs 297,456 crore, while on 11 October it was Rs 140,490 crore, indicating that the central bank continued to absorb systemic liquidity through the standing deposit facility, variable rate reverse repos and other operations.

Our previous report discussed RBI Governor Sanjay Malhotra's warning about further tightening in global financial conditions, highlighting the risk that rising leverage, stretched equity valuations and a potential slowdown in the AI investment cycle could spread volatility across banks and markets. The report also underscored that a rise in bond yields and external shocks could increase the sensitivity of funding costs and capital flows, while policy credibility and macroeconomic indicators will remain crucial for maintaining stability in India.

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