India's forex reserves hit record $740.8 billion, boosting rupee

India's foreign-exchange reserves hit a record $740.8 billion by the end of August, climbing for a ninth straight week and helping the rupee rebound over 2.5% from late-May lows to close at 94.49 per dollar Friday. The surge, driven by dedicated dollar-inflow programmes, has boosted public sector banks' liquidity coverage ratios, giving them more headroom to expand lending. However, state-run lenders' deposit growth trails private banks by about four percentage points, forcing greater reliance on borrowings. PSBs' aggregate loan-to-deposit ratio rose to 81.3% in Q1FY27 from 77% a year earlier, though private banks operate at a higher 90.5%. The revised liquidity framework, effective April, benefits PSBs due to their deposit mix.