DBS Bank chief executive Tan Su Shan has pointed to the strong uptake of FCNR(B) deposits as a sign that global investors continue to place confidence in India, even as policymakers and markets remain alert to capital outflows and pressure on the rupee. Speaking on the broader economic outlook, Tan said the demand for foreign currency non-resident bank deposits reflects a willingness among non-resident Indians and overseas savers to keep funds linked to India, despite a volatile global financial environment.
FCNR(B) Signals Confidence
Tan's remarks come at a time when India is balancing robust domestic growth against external vulnerabilities. FCNR(B) deposits, which allow non-resident Indians to park foreign currency funds in Indian banks, are often watched as a barometer of trust in the country's financial system and banking franchise. Strong inflows into these deposits can help support foreign exchange reserves and provide a cushion against currency swings, particularly when global capital markets are uneven and risk appetite is shifting.
Her comments also underscore a broader policy concern: India cannot rely indefinitely on portfolio flows or remittances alone to stabilise the rupee. Tan said the country needs more foreign direct investment, which tends to be longer-term and more productive than short-term capital movements. She also stressed the importance of exports, arguing that a stronger external earnings base is essential if India is to reduce pressure on its currency and deepen its integration with global trade.
The message is significant because it aligns with a long-standing debate in India's economic policy circles. While the country has attracted strong investor interest in sectors such as technology, manufacturing and financial services, the scale of FDI has often lagged behind the ambition of policymakers. A more durable inflow of foreign capital, analysts say, would help finance growth, support jobs and improve the resilience of the balance of payments.
Rupee Needs Wider Support
Tan's framing suggests that the rupee's stability depends not only on central bank intervention or temporary inflows, but on the strength of India's underlying external account. In practical terms, that means expanding export capacity, improving manufacturing competitiveness and drawing in capital that builds factories, supply chains and long-term productive assets.
Her remarks also arrive against the backdrop of a global environment in which higher-for-longer interest rates in major economies, geopolitical uncertainty and uneven growth have made emerging-market currencies more sensitive to shifts in sentiment. For India, that means even a strong domestic growth story can face pressure if external funding conditions tighten or if trade deficits widen.
At the same time, Tan's comments on FCNR(B) deposits indicate that India remains an attractive destination for global and diaspora-linked savings. That matters for banks with cross-border franchises, which can use such flows to deepen customer relationships and support foreign exchange business. It also reinforces the idea that India's financial system continues to command trust among overseas Indians, even amid broader concerns about capital mobility.
AI Opportunity, Hardware Gap
Beyond macroeconomics, Tan expressed optimism about India's potential in artificial intelligence, citing the country's deep software talent pool and the rapid expansion of digital infrastructure. India has built one of the world's largest digital public platforms, and its engineering workforce is widely seen as a competitive advantage in software development, data services and enterprise technology.
But Tan also pointed to a critical gap: software strength alone will not be enough if India wants to compete across the full AI stack. Hardware capabilities, including compute infrastructure, chips and related systems, remain an area where the country must improve if it is to move from being a major consumer of digital services to a stronger producer of advanced AI solutions.
That observation reflects a broader strategic challenge. India has become a global leader in digital adoption and software services, but the next phase of technological competition will require more investment in physical infrastructure, semiconductor ecosystems and high-performance computing. Without that, the country risks remaining heavily dependent on imported hardware even as its software sector continues to expand.
Tan's comments therefore connect two of India's most important economic narratives: the need for stronger external capital to support macro stability, and the need for deeper technological capability to sustain long-term growth. Together, they suggest that India's next stage of development will depend not just on domestic demand, but on how effectively it converts global confidence into durable investment, exports and innovation capacity.