India's record forex reserves: How RBI built a $740 billion shield

India's foreign exchange reserves hit a record high of over $740 billion in September 2026, driven by a Reserve Bank of India scheme that attracted $136.38 billion in foreign currency deposits from non-resident Indians during the US-Iran war. The RBI incentivized banks to attract FCNR(B) deposits by absorbing currency-hedging costs, allowing lenders to offer better returns and even leverage deposits up to 19 times. Inflows far exceeded the initial $80 billion estimate, with nearly half arriving in the final 10 days before the scheme closed August 31. Experts say the buffer covers over 10 months of imports and strengthened the rupee to a two-month high of 94.48 per dollar. However, some caution that the reserves level was previously achieved in February 2026, and sustainable growth depends on improving the trade balance rather than one-time schemes.