RBI's special forex swap window outpaces 2013 inflows in only weeks

FCNR(B) deposits contributed $36.7 billion as banks raised nearly $41 billion under the RBI's concessional swap facility in less than two months, exceeding the 2013 mobilisation

The Reserve Bank of India (RBI) on Saturday said banks had mobilised nearly $41 billion in foreign exchange inflows as of July 31 under its concessional swap window for fresh Foreign Currency Non-Resident (Bank) [FCNR(B)]deposits, Overseas Foreign Currency Borrowings (OFCBs) and External Commercial Borrowings (ECBs). Of the total inflows, $36.7 bn came through FCNR(B) deposits, $2.57 bn through OFCBs and $1.5 bn through ECBs.

 

The latest mobilisation has already surpassed the roughly $34 bn raised under the RBI's special FCNR(B) deposit scheme in 2013. Overall inflows under the current concessional swap window have comfortably exceeded the 2013 mobilisation in less than two months since the facility was operationalised.

 

 

The RBI announced the concessional swap facility for fresh FCNR(B) deposits, OFCBs and ECBs on June 5, 2026, and operationalised it on June 8. The swap window will remain available until September 30, 2026, for FCNR(B) deposits and until December 31, 2026, for OFCBs and ECBs.

 

The latest figures mark a sharp jump from the RBI's previous update on July 17, when banks had mobilised $20.72 bn under the swap window, comprising $17.41 billion through FCNR(B) deposits, $1.97 bn through OFCBs and $1.34 billion through ECBs.

 

The strong response to the scheme has exceeded market expectations, prompting analysts to revise upward their estimates of total inflows by the time the swap window closes.

 

SBI Research recently raised its estimate for FCNR(B) deposit mobilisation to $65-70 billion by the end of the scheme from its earlier projection of $40 bn-$45 bn. Including OFCBs and ECBs, the brokerage expects total inflows of $80-85 bn.

 

According to the report, public sector banks (PSBs), particularly the larger lenders, have led the mobilisation by leveraging their existing deposit relationships and customer base across geographies, while adopting a mix of onshore and offshore strategies.

 

Analysts have also pointed to large foreign banks, including HSBC, as key contributors to the strong mobilisation.

 

SBI Research expects inflows to accelerate further as a significant portion of FCNR(B) deposits maturing in August and September are likely to be renewed under the new scheme, aided by higher interest rates. It estimates that renewals alone could add around $10 billion over its baseline projections, particularly from jurisdictions offering tax concessions.

 

The RBI announced the concessional swap facility amid mounting pressure on the rupee from elevated crude oil prices, global risk aversion, and persistent demand for dollars. The measures were aimed at attracting stable foreign currency inflows, augmenting the country's foreign exchange reserves and easing pressure on the balance of payments without relying solely on intervention in the spot foreign exchange market.

 

Under the scheme, the RBI offers banks a concessional swap window for fresh FCNR(B) deposits, Overseas Foreign Currency Borrowings (OFCBs) and External Commercial Borrowings (ECBs). The central bank absorbs the principal hedging cost by providing a dollar-rupee swap at par, substantially lowering the cost of mobilising overseas funds for banks. Incremental FCNR(B) deposits mobilised under the scheme are also exempt from the cash reserve ratio (CRR) and statutory liquidity ratio (SLR) requirements, making them more attractive for banks.