RBI Closes FCNR(B) Swap Early: $52.3B Inflows
By ThePip Desk
RBI to close FCNR(B) swap facility on Aug 31, 2026, ahead of schedule, due to over $52.3 billion in forex inflows. Learn more about the impact on India’s economy.
The Reserve Bank of India (RBI) announced on Friday it will close its special swap window for Foreign Currency Non-Resident (Bank) deposits (FCNR(B)) on August 31, 2026. This decision comes a month earlier than initially planned.
The central bank cited an “encouraging response” to the scheme, which has led to robust forex inflows into India. The early closure aims to prevent the accumulation of excessive foreign currency liabilities that the RBI would need to manage upon their maturity.
Significant Inflows Registered
By August 13, 2026, inflows specifically under this special FCNR(B) facility had already surpassed $52.3 billion. Total inflows, which encompass FCNR(B) deposits, Overseas Foreign Currency Borrowings (OFCBs), and External Commercial Borrowings (ECBs), reached $56.85 billion.
FCNR(B) deposits alone contributed $52.3 billion to this sum. Overseas Foreign Currency Borrowings (OFCBs) added $2.805 billion, and External Commercial Borrowings (ECBs) accounted for $1.741 billion.
Reports on August 10 had already indicated that the RBI might opt for an early closure once inflows reached the $50 billion mark.
Understanding the FCNR(B) Swap Facility
The FCNR(B) swap facility was initially launched on June 8, 2026, with the goal of attracting foreign currency. This was achieved through various instruments including FCNR(B) deposits, ECBs, and OFCBs.
The RBI offered banks a three-to-five-year swap facility to cover hedging costs. This measure made FCNR(B) deposits more attractive for overseas investors by temporarily removing interest-rate caps, resulting in a significant surge in dollar inflows.
These current inflows are comparable to the RBI’s FCNR(B) mobilisation program in 2013, which raised approximately $26 billion during a period of considerable rupee pressure.
Continued Avenues and Future Considerations
While the FCNR(B) swap window is closing, the schemes for External Commercial Borrowings (ECBs) and Overseas Foreign Currency Borrowings (OFCBs) will remain open. These specific facilities are scheduled to continue until December 31, 2026.
The substantial volume of foreign currency inflows underscores the ongoing need for careful management by the central bank. This includes strategic planning for the maturity-related outflows associated with these liabilities in the future.