Foreign exchange inflows under the RBI’s special USD-INR swap facility have reached $72.85 billion as of August 21.
FCNR(B) deposits accounted for the bulk of the inflows at $65.397 billion ahead of the August 31 deadline.
Highlights
- Total inflows under RBI’s special forex swap facility reached $72.85 billion as of August 21.
- FCNR(B) deposits contributed $65.397 billion, accounting for nearly 90% of total inflows.
- External Commercial Borrowings (ECBs) brought in $2.591 billion.
- Overseas Foreign Currency Borrowings (OFCBs) accounted for another $4.860 billion.
- RBI has advanced the closure of the FCNR(B) swap window to August 31, 2026 following a strong response.
- ECB and OFCB facilities will remain available until December 31, 2026.
New Delhi: Foreign exchange inflows under the Reserve Bank of India’s (RBI) special USD-INR forex swap facility have climbed to $72.85 billion, reflecting a strong response from banks and depositors.
According to data reported by authorised dealer banks and released by the RBI, the total inflows stood at $72.85 billion as of August 21, 2026.
Foreign Currency Non-Resident (Bank), or FCNR(B), deposits accounted for the largest share. Inflows through this route reached $65.397 billion, representing nearly 90 per cent of the total amount raised under the special facility.
External Commercial Borrowings (ECBs) contributed $2.591 billion, while Overseas Foreign Currency Borrowings (OFCBs) accounted for $4.860 billion.
The RBI had introduced the special swap window on June 8. Following what it described as an encouraging response and the resulting foreign exchange inflows, the central bank subsequently decided to advance the closure of the FCNR(B) swap window by one month to August 31, 2026.
However, facilities covering ECBs and OFCBs will continue to remain available until December 31, 2026.
The scheme provides participating banks with benefits including a zero-cost principal hedge, certain regulatory exemptions and leverage facilities. These measures make it more attractive for banks to mobilise FCNR(B) deposits, which are primarily targeted at non-resident Indians.
The facility is largely aimed at improving liquidity and supporting stability in the foreign exchange market rather than directly triggering an appreciation of the rupee.
The substantial inflows are also expected to influence the banking sector. Higher FCNR(B) deposits could help banks reduce their dependence on expensive bulk deposits and may contribute to softer deposit rates.
However, the additional deposits could put temporary pressure on bank profitability. Net interest margins (NIMs) could contract by around 3-15 basis points, according to estimates cited in the report.
Several banks have indicated during their Q1FY27 earnings calls that replacing high-cost bulk deposits will be among their priorities. The impact on margins from the special facility is expected to be temporary as banks adjust their funding mix.
