The Reserve Bank of India’s special foreign exchange swap facility has drawn USD 136.4 billion of forex inflows between June 08 and August 31, with FCNR(B) deposits emerging as the overwhelming contributor as banks raced to mobilise overseas funds before the window closed.
According to provisional data released by the central bank on Wednesday, banks mobilised USD 127.226 billion through FCNR(B) deposits, while overseas foreign currency borrowings (OFCBs) contributed USD 5.26 billion and external commercial borrowings (ECBs) added USD 3.891 billion.
FCNR(B) deposits therefore accounted for 93.3 per cent of the total USD 136.377 billion raised through the three routes under the RBI’s special swap facility.
The latest number marks an acceleration from the USD 52.3 billion of FCNR(B) inflows recorded as of August 13. At that point, total inflows through FCNR(B), OFCBs and ECBs stood at USD 56.85 billion, with FCNR(B) already accounting for nearly 92 per cent of mobilisation.
The RBI had introduced the special USD-INR forex swap facility on June 8, 2026, covering FCNR(B) deposits, ECBs and OFCB inflows. The objective was to attract foreign currency into the domestic banking system at a time when the rupee and external financing conditions were under pressure. The facility enabled banks to mobilise foreign currency and undertake swaps with the RBI on concessional terms. The FCNR(B) mobilisation window was initially supposed to remain open until September 30.
The response to the FCNR(B) component, however, was significantly stronger than anticipated. By August 13, banks had already mobilised USD 52.3 billion through the route, prompting the RBI to advance the deadline for fresh FCNR(B) deposits by a month to August 31. The central bank said the decision was based on the encouraging response and resultant forex inflows. Swaps against eligible FCNR(B) deposits mobilised under the facility can still be undertaken with the RBI until September 11.
The other two components of the scheme, ECBs and OFCBs, remain open until December 31, 2026.
From USD 52.3 billion as of August 13, FCNR(B) inflows rose to USD 127.2 billion by August 31, an increase of about USD 74.9 billion.
Total forex mobilisation increased from USD 56.85 billion on August 13 to USD 136.38 billion by August 31, an increase of nearly USD 79.5 billion, or 140 per cent.
The surge came as banks aggressively pitched FCNR(B) deposits to non-resident customers, helped by the temporary regulatory incentives and concessional swap arrangement. The RBI also allowed banks greater flexibility in accessing the swap facility towards the end of the window as the sharp inflows began creating pressures in the short-term swap and money markets.
India’s forex reserves touched a record USD 729.3 billion as of August 21.
The flood of foreign currency, however, has also created a liquidity-management challenge for banks. India’s banking system liquidity surplus rose to around Rs 6.65 lakh crore by August 31, its highest level since May 2022, with the FCNR(B) mobilisation contributing to the sharp increase. The excess liquidity pushed the weighted average call rate down to around 4.98 per cent, below the RBI’s repo rate.
