Amid strong forex inflows, RBI to end FCNR(B) swap facility early
Mumbai, August 14
The Reserve Bank of India has decided to prematurely close the deposit mobilisation window under its special forex swap facility for Foreign Currency Non-Resident deposits, bringing forward the deadline for banks to mobilise such deposits to August 31, 2026.
The decision comes after the facility received an encouraging response, with foreign currency inflows through FCNR(B) deposits, Overseas Foreign Currency Borrowings (OFCBs) and External Commercial Borrowings (ECBs) reaching USD 56.846 billion as of August 13, according to the RBI.
The special USD-INR forex swap facility covering FCNR(B) deposits, ECBs and OFCB inflows was introduced by the central bank on June 8, 2026.
Under the original schedule, eligible FCNR(B) deposits could be mobilised by banks until September 30, 2026, while authorised dealer banks were originally allowed to execute the USD-INR forex swap transactions with the RBI until October 16, 2026.
The RBI has now brought forward the FCNR(B) deposit mobilisation deadline by a month. Under the revised timeline, FCNR(B) deposits can be mobilised only until August 31, 2026. However, swaps against these FCNR(B) deposits can still be availed with the RBI until September 11, 2026.
The RBI said the decision was taken based on the encouraging response to the swap facility for FCNR(B) deposits and the resultant forex inflows.
Data reported by authorised dealer banks showed that FCNR(B) deposits accounted for the bulk of the inflows under the facility. As of August 13, FCNR(B) deposits stood at USD 52.3 billion.
The inflows through OFCBs stood at USD 2.805 billion, while ECBs contributed another USD 1.741 billion. Together, the three channels brought total forex inflows to USD 56.846 billion under the facility.
While the RBI has decided to close the FCNR(B) mobilisation window earlier than originally scheduled, the schemes for ECBs and OFCBs will continue to remain open until December 31, 2026, as announced earlier.
The move therefore specifically changes the timeline for FCNR(B) deposits, while leaving the existing timeline for ECB and OFCB inflows unchanged.
The RBI had introduced the special forex swap facility as a mechanism covering these foreign currency inflows. Under the facility, banks mobilising eligible FCNR(B) deposits can avail themselves of the swap arrangement with the central bank.
With the revised deadline, banks now have until August 31 to mobilise eligible FCNR(B) deposits. The corresponding swaps can be undertaken with the RBI until September 11, giving banks additional time after the deposit mobilisation window closes to complete the swap transactions.
The RBI's latest announcement comes after the facility generated USD 56.846 billion in total reported forex inflows by August 13, with FCNR(B) deposits making up more than USD 52 billion of the total.
— ANI
Reader Comments
This is a wise decision by the RBI. While I appreciate the strong forex inflows, I hope the central bank is also mindful of the rupee's stability. With such massive inflows, there's always a risk of currency appreciation hurting our exports. Balance is key.
As an NRI, I was considering putting money into FCNR(B) deposits, but with this early closure, I might have to act fast. The 7%+ returns were quite attractive. Still, it's good to see RBI being proactive rather than waiting for the full timeline.
Honestly, I think this is a responsible approach by the RBI. Instead of keeping the window open and accumulating unnecessary forex reserves, they're aligning with actual requirements. But I do wonder – will this lead to better interest rates for regular depositors in India? 🤔
Very bullish signal for the economy! When RBI closes a swap facility early due to overwhelming response, it shows we've achieved the desired reserve levels. This should boost investor confidence further. Let's hope we maintain this momentum.
Interesting development with India's forex management. The $52 billion in FCNR(B) deposits is impressive. Though I'm just an observer from abroad, this shows India's growing strength in attracting stable foreign capital. Well done to the RBI for being decisive.
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