RBI swap window draws strong inflows
Key Highlights
- FCNR(B) inflows crossed $100 billion by the August 31 deadline, according to a Financial Times report.
- The inflows significantly exceeded the RBI’s earlier estimate of $80 billion across FCNR(B), ECB and OFCB routes.
- The FCNR(B) swap window closed on August 31, a month earlier than the original September 30 deadline.
- Banks can use the RBI swap facility for FCNR(B) deposits already contracted until September 11.
- ECB and OFCB swap windows will remain available until December 31, 2026.
New Delhi, September 2, 2026 — Capital inflows through Foreign Currency Non-Resident (Bank), or FCNR(B), deposits crossed the $100-billion mark by August 31, substantially exceeding the Reserve Bank of India’s earlier expectations for the special foreign-exchange swap programme.
According to a Financial Times report cited by Business Standard, the FCNR(B) scheme accounted for the bulk of the inflows under the RBI’s special swap facility. The facility also attracted funds through external commercial borrowings (ECBs) and overseas foreign currency borrowings (OFCBs). (Business Standard)
The RBI had earlier estimated that the three routes together could attract around $80 billion. Governor Sanjay Malhotra had said in August that the central bank expected inflows of at least $80 billion through the subsidised swap facilities, describing the strong response as a reflection of India’s macroeconomic fundamentals and a potential boost to the country’s balance of payments. (Reuters)
The central bank operationalised the special swap facility on June 8, while FCNR(B) inflows began on June 23. RBI data available up to August 21 showed that the three routes had already attracted $72.85 billion, including $65.4 billion through FCNR(B) deposits, $4.86 billion through OFCBs and $2.59 billion through ECBs. (Business Standard)
The strong response prompted the RBI to bring forward the closure of the FCNR(B) window. The facility, originally scheduled to remain available until September 30, closed on August 31. However, banks can continue to use the RBI’s swap facility for FCNR(B) deposits that had already been contracted until September 11.
The swap arrangements carry maturities of three to five years, with most of the funds raised under the facility coming through deposits with a five-year maturity. The ECB and OFCB windows, meanwhile, will remain open until December 31, 2026. (Business Standard)
The surge in foreign-currency deposits has strengthened the RBI’s foreign-exchange position at a time when the central bank has been actively managing pressure on the rupee. Reuters reported that NRI deposits under the concessional swap arrangements rose from $65.4 billion on August 21 to more than $100 billion by August 31, adding to the central bank’s capacity to support the currency and intervene in foreign-exchange markets. (Reuters)
The RBI’s decision to close the FCNR(B) window early was earlier described by Malhotra as a calibrated and data-driven response to the strong inflow response. The central bank had indicated that advancing the deadline was a decision taken from a position of strength. (Reuters)
The scale of the inflows provides India with an additional foreign-exchange buffer and comes as the RBI continues to navigate external pressures including elevated oil prices, global bond yields and volatility in currency markets. The strong mobilisation also highlights the response from overseas depositors to the temporary incentives built into the special swap facility.
With the FCNR(B) window now closed but contracted transactions eligible for swaps until September 11, attention will shift to the remaining ECB and OFCB facilities and the extent to which the additional foreign-currency inflows strengthen India’s external-sector resilience.
