RBI sells $14.9 billion in forex to curb rupee swings; defaulters owe ₹2.85 lakh crore

RBI's forex intervention

The Reserve Bank of India (RBI) sold $14.9 billion in the foreign exchange market between January and May 2026, according to a report by Fortune India. The central bank's move was aimed at curbing excessive volatility in the rupee, which has faced pressure from global and domestic factors.

This intervention reflects the RBI's stated policy of smoothing out sharp movements rather than defending any particular exchange rate level. Market participants had earlier speculated about such sales, but the quantum has now been confirmed in the report.

Rupee pressure and central bank strategy

The rupee saw periodic bouts of weakness during the first five months of the year, driven by factors such as crude oil prices, foreign portfolio outflows, and a stronger dollar. The RBI's sales helped prevent disorderly moves, though the currency still ended lower against the dollar in that period.

Analysts note that the central bank's approach has been to intervene opportunistically, using reserves built up in earlier years. India's forex reserves remain comfortable, giving policymakers room to act without alarming markets.

Wilful defaulters: a mounting concern

Separately, the Fortune India report highlights that wilful defaulters owe Indian banks a staggering ₹2.85 lakh crore. This figure underscores the persistent challenge of credit discipline in the banking system, despite various regulatory and legal measures.

Wilful defaulters are borrowers who have the capacity to repay but deliberately avoid doing so, often by siphoning off funds or misrepresenting financials. Banks have been tightening norms and pursuing recovery through tribunals and the Insolvency and Bankruptcy Code (IBC), but recovery remains slow.

What this means for the banking sector

The dual pressures of forex management and non-performing assets (NPAs) continue to shape the RBI's policy calculus. While the central bank does not directly handle wilful default cases, its regulatory framework influences how banks deal with such borrowers.

Bankers say that while the overall NPA ratio has improved in recent years, the wilful defaulter list remains a stubborn segment. The ₹2.85 lakh crore figure represents a significant portion of the banking system's stressed assets, and its resolution is critical for improving credit growth and profitability.

Outlook

Going ahead, the RBI's forex intervention is likely to remain data-driven, responding to global cues and domestic liquidity conditions. Meanwhile, the government and regulators are expected to continue their push for faster resolution of wilful default cases, possibly through stricter enforcement and better coordination between banks and investigative agencies.