India Attracts $72.8B via RBI Swap Facility

India secured a substantial $72.8 billion in dollar inflows by August 21, 2026, leveraging a special swap facility introduced by the Reserve Bank of India (RBI).

These significant inflows, predominantly from Foreign Currency Non-Resident (Bank) or FCNR(B) deposits, prompted the RBI to adjust the acceptance timeline for these specific deposits.

Inflow Dynamics and RBI’s Deadline Adjustment

The largest portion of these dollar inflows, amounting to $65.39 billion, originated from FCNR(B) deposits.

External commercial borrowings (ECBs) contributed $2.59 billion, while overseas foreign currency borrowings (OFCBs) added $4.86 billion to the total.

Due to the robust collection, the RBI decided to shorten the deadline for banks to accept FCNR(B) deposits to August 31, 2026, an earlier date than the initially planned September 30.

An additional $13 billion was collected through the FCNR(B) window in the week leading up to August 21.

However, the swap scheme for ECBs and OFCBs will continue as initially scheduled until December 31, 2026.

Mechanism of the Special Swap Facility

The special swap facility, which became operational on June 8, was designed to enhance dollar inflows and bolster India’s foreign exchange reserves.

This mechanism allows banks to exchange eligible overseas borrowings with the central bank at concessional rates, effectively lowering their cost of funds.

Furthermore, banks can utilize a zero-cost hedging facility for FCNR(B) swaps with the RBI, available until September 11.

Impact on India’s Foreign Exchange Reserves

The FCNR(B) scheme has already surpassed the $26 billion mobilized under a similar initiative in 2013, achieving this milestone in less than three months.

These inflows have significantly contributed to the country’s foreign exchange reserves, which have surged by nearly $50 billion since July.

Reserves reached $716.90 billion by August 14, marking seven consecutive weeks of growth.