India Forex Reserves Drop by $5.01 Billion to $721.02 Billion as Bank Credit Expands Year on Year

India's foreign exchange reserves fell by $5.011 billion week-on-week to settle at $721.016 billion (equivalent to ₹68,46,160 crore) for the week ended October 16, 2026, according to data published in the Reserve Bank of India's (RBI) Weekly Statistical Supplement (Press Release 2026-2027/1377).

The dip reflects ongoing valuation adjustments and central bank operations to smooth currency volatility. Despite the weekly contraction, the reserve cushion remains substantial, underpinning macroeconomic stability.

Breakdown of Foreign Exchange Assets

The key components of India's reserve portfolio as of October 16, 2026, stood as follows:

• Foreign Currency Assets (FCAs): Reached $591.847 billion, representing the largest portion of total reserves.
• Gold Reserves: Stood at $105.8 billion.

Commercial Bank Deposits and Credit Show Annual Growth

In the banking sector, scheduled commercial banks reported continued expansion over the previous year, highlighting enduring credit appetite across industries and retail borrowers:

• Aggregate Deposits: Total deposits stood at ₹27,875,910 crore as of October 15, 2026. While deposits fell by ₹519,170 crore over the reporting fortnight, they registered an increase of ₹3,992,695 crore year on year.
• Bank Credit: Total credit outstanding stood at ₹22,742,777 crore. Credit retracted by ₹252,075 crore over the fortnight, but posted a sharp expansion of ₹3,507,023 crore compared to the corresponding period last year.

The alternate-period contractions in deposits and lending reflect typical fortnightly liquidity flow adjustments, while the broader double-digit annual trends remain consistent with sustained domestic demand.

Liquidity Management and Government Borrowing

The RBI's weekly balance sheet indicators also pointed to shifting domestic liquidity conditions. Between October 12 and October 18, 2026, the central bank reduced its net liquidity absorption from ₹243,633 crore to ₹134,268 crore. This moderation in absorption indicates that the central bank allowed additional cash to remain in the banking channel to alleviate short-term liquidity pressures.

On the sovereign lending front, RBI loans and advances extended to state governments fell sharply from ₹58,569 crore on October 9 to ₹29,700 crore on October 16. Meanwhile, central government advances from the RBI under ways and means facilities remained at zero, underscoring stable cash management at the Union government level.

For market participants and institutional investors, the combination of robust annual credit expansion and proactive central bank liquidity intervention indicates that domestic financial conditions remain supportive, even as external sector metrics navigate global currency movements.

Tags: Reserve Bank of India Indian Banking Sector Forex Reserves Commercial Banks Money Supply