India gets $72.8 billion in dollar inflows under RBI swap facility
The Reserve Bank of India reported that its special USD-INR forex swap facility has drawn $72.8-72.85 billion in dollar inflows as of August 21, 2026
FCNR(B) deposits accounted for the bulk of inflows at roughly $65.4 billion, with Overseas Foreign Currency Borrowings (OFCBs) contributing about $4.86 billion and External Commercial Borrowings (ECBs) about $2.59 billion
The facility was introduced on June 8, 2026, amid pressure on the rupee, and the window for FCNR(B) deposits was shortened by a month (now closing August 31, 2026) given the strong response, while the ECB/OFCB window remains open till December 31, 2026
RBI Forex Swap Facility — Mechanism and Purpose
A currency swap facility allows banks/RBI to exchange one currency for another for a defined period, with an agreement to reverse the exchange later at a pre-set rate. RBI's special USD-INR swap window incentivises banks to mobilise foreign-currency deposits and borrowings by letting them swap the dollars for rupees with the RBI, insulating them from exchange-rate risk on the swap leg.
Key Details
- Introduced June 8, 2026, covering three channels: FCNR(B) deposits, External Commercial Borrowings (ECBs), and Overseas Foreign Currency Borrowings (OFCBs)
- Purpose: shore up dollar inflows and support the rupee without directly running down RBI's forex reserves
- Structured as a par swap in the 2026 version — RBI absorbs the hedging cost, unlike the 2013 version which offered a concessional subsidised swap rate to banks
- FCNR(B) window shortened by a month (closing August 31, 2026 instead of end-September) due to strong uptake; ECB/OFCB channels remain open till December 31, 2026
The $72.8 billion figure is RBI's own progress update on this facility, confirming FCNR(B) deposits are the dominant channel and that the scheme is being wound down early on the deposit side because it already achieved its dollar-mobilisation objective.
FCNR(B) Deposits — Definition and Role in External Financing
Foreign Currency Non-Resident (Bank) deposits are term deposits that Non-Resident Indians (NRIs) can maintain in India in a permitted foreign currency (such as USD), with both principal and interest fully repatriable and shielded from rupee depreciation risk for the depositor.
Key Details
- Governed under FEMA regulations, distinct from NRE (Non-Resident External, rupee-denominated) and NRO (Non-Resident Ordinary) accounts
- Because deposits are foreign-currency denominated, the exchange-rate risk on the RBI's swap sits with the RBI/banking system once swapped into rupees, not the depositor
- Used historically as a rapid dollar-mobilisation tool during periods of rupee stress, since NRIs can be attracted with a swap-subsidised or par-swap-backed interest rate advantage over comparable foreign deposits
- 2026 FCNR(B) inflows (~$65.4 billion) form the dominant share of the $72.8 billion total, reflecting its position as the most responsive channel among the three
FCNR(B)'s outsized share of the $72.8 billion total illustrates why this instrument, rather than ECBs or OFCBs, remains RBI's preferred lever for fast dollar mobilisation.
Historical Precedent — the 2013 FCNR(B) Swap Window (Taper Tantrum)
This is not the first time RBI has used a subsidised FCNR(B) swap window to defend the rupee; the 2013 episode is a standard reference point for comparing crisis-response tools.
Key Details
- In September 2013, amid the "taper tantrum" and the rupee's fall to an all-time low of around 68.8/USD, then RBI Governor Raghuram Rajan opened a similar FCNR(B) swap window offering banks a concessional swap cost (around 3.5%, versus market rates near 7%)
- The 2013 window mobilised about $34 billion in FCNR(B) deposits as part of a broader package that helped stabilise the rupee
- The 2026 version has already mobilised roughly double that amount (~$65.4 billion via FCNR(B) alone) but, per commentary, has produced a comparatively weaker currency-stabilisation effect than in 2013 — suggesting the facility now functions more as a tool for building external buffers than as a decisive rupee-defence mechanism
- Both episodes show RBI relying on non-resident deposit mobilisation rather than direct reserve drawdown to manage external-sector stress
The comparison frames the current $72.8 billion figure in context — it is a larger absolute mobilisation than 2013 but is being read by analysts differently, given the changed structure (par swap vs subsidy) and the scale of India's external sector today.
External Commercial Borrowings (ECBs) and Overseas Foreign Currency Borrowings (OFCBs)
ECBs are loans raised by eligible resident Indian entities from recognised non-resident lenders (commercial banks, buyers'/suppliers' credit, securitised instruments, bonds), regulated by RBI under FEMA to manage the terms on which Indian companies access foreign debt capital.
Key Details
- ECB regulation covers eligible borrowers/lenders, minimum average maturity, permitted end-uses, and an all-in-cost ceiling, administered under the FEMA (Borrowing and Lending) Regulations
- OFCBs refer to foreign-currency borrowings raised by banks' overseas branches/subsidiaries, a channel more specific to the banking sector's own external funding rather than corporate borrowing
- In the current swap facility, ECBs (~$2.59 billion) and OFCBs (~$4.86 billion) are smaller than FCNR(B) but remain open for a longer window (till December 31, 2026), reflecting their typically longer origination cycles compared to retail-style NRI deposits
The three-channel design lets RBI capture both fast-moving deposit inflows (FCNR-B) and slower-moving debt-market inflows (ECB/OFCB) under one facility, which explains the differentiated closing dates.
- Total inflows under RBI's special USD-INR swap facility: $72.8-72.85 billion as of August 21, 2026
- FCNR(B) deposits: ~$65.4 billion (largest share)
- Overseas Foreign Currency Borrowings (OFCBs): ~$4.86 billion
- External Commercial Borrowings (ECBs): ~$2.59 billion
- Facility introduced: June 8, 2026
- FCNR(B) window closing date: August 31, 2026 (shortened from end-September due to strong response)
- ECB/OFCB window closing date: December 31, 2026
- 2013 precedent: FCNR(B) swap window under RBI Governor Raghuram Rajan mobilised ~$34 billion amid the taper-tantrum rupee crisis (rupee fell to ~68.8/USD, August 2013)