What changed
Net claims of non-residents on India fell by $52.4 billion in Q4 FY26 to $209.9 billion, primarily due to a decline in foreign-owned assets (portfolio and direct investment) and a rise in Indian residents' overseas financial assets. Rupee depreciation against the US dollar also contributed to the fall in US dollar-denominated liabilities.
What it means for you
For Indian banks and lenders, the improving IIP signals reduced external vulnerability and stronger foreign exchange buffers. The rise in overseas direct investment and reserve assets suggests better capital outflow management, while lower foreign liabilities may ease pressure on domestic liquidity and interest rates.
What you must do
- Monitor portfolio investment flows for potential volatility due to exchange rate movements.
- Assess impact of rupee depreciation on foreign currency-denominated liabilities and assets.
- Review overseas direct investment strategies to align with rising Indian asset positions.
- Evaluate reserve asset adequacy for managing external shocks.
Who it affects
Banks with foreign currency exposures, Lenders involved in trade finance and cross-border loans, Portfolio investors and asset managers, Corporate treasuries managing overseas investments
What drove the decline in foreign liabilities in Q4 FY26?
The decline was mainly due to a fall in portfolio investment and direct investment by non-residents, partly offset by rupee depreciation which reduced the US dollar value of inward direct investment.
How did the assets-to-liabilities ratio change?
The ratio improved to 85.2% in March 2026 from 82.0% in December 2025, indicating a stronger international asset position relative to liabilities.