Special swaps rake in $143.5 billion in forex inflows: FCNR(B) scheme leads with $133 billion
The Reserve Bank of India's concessional forex swap window, operationalised on June 8, 2026, mobilised total inflows of $143.5 billion as of September 18, 2026, across FCNR(B) deposits, External Commercial Borrowings (ECBs), and Overseas Foreign Currency Borrowings (OFCBs).
FCNR(B) deposits accounted for the bulk of inflows at nearly $133 billion, with the window for mobilising fresh FCNR(B) deposits having closed on August 31, 2026, though banks could continue availing swaps against those deposits with the RBI until September 11, 2026.
ECBs and OFCBs together contributed a smaller share of inflows, with the window for these two categories remaining open until December 31, 2026.
Rising global bond yields are noted as a potential constraint on further overseas borrowing through the ECB/OFCB route even as that window stays open.
FCNR(B) Deposits and RBI's Concessional Swap Mechanism
A Foreign Currency Non-Resident (Bank) — FCNR(B) — deposit is a term deposit scheme allowing Non-Resident Indians (NRIs) to hold fixed deposits in India denominated in a foreign currency (protecting the depositor from rupee exchange-rate risk), with both principal and interest freely repatriable and interest income tax-exempt in India. In a "swap window," the RBI allows banks to convert the foreign currency mobilised through such deposits into rupees at a concessional (subsidised) swap rate, well below the prevailing market forward premium, effectively subsidising banks' cost of bringing in dollar inflows.
Key Details
- The FCNR(B) Scheme was introduced in May 1993, replacing the earlier FCNR(A) scheme under which the RBI/government bore the exchange risk; under FCNR(B), banks themselves bear and manage the foreign exchange risk on these deposits.
- FCNR(B) deposits are distinct from NRE (Non-Resident External) deposits, which are rupee-denominated and also tax-free/fully repatriable, and from NRO (Non-Resident Ordinary) accounts, which hold India-sourced income and are taxable — FCNR(B)'s key distinguishing feature is the foreign-currency denomination that shields the depositor from currency risk.
- In the 2026 window, the RBI offered eligible transactions a swap rate below the prevailing market forward premium (quoted around 3.5% per annum at the time), incentivising banks to route NRI deposit mobilisation and dollar borrowing through the window rather than the open market.
The $133 billion raised through FCNR(B) deposits is the direct result of banks using this concessional swap mechanism to attract NRI dollar deposits at a subsidised conversion cost, which is why FCNR(B) dominates the total $143.5 billion mobilised.
The 2013 FCNR(B) Swap Scheme — Precedent from the Taper Tantrum
UPSC frequently tests comparative recall of India's two major FCNR(B)-based swap interventions: the 2013 scheme launched during the "taper tantrum" (when the US Federal Reserve's signal to taper quantitative easing triggered capital flight and sharp rupee depreciation across emerging markets, including India) and the 2026 scheme.
Key Details
- In September 2013, then-RBI Governor Raghuram Rajan opened two swap windows: one letting banks swap FCNR(B) deposits (of three years and above) into rupees at a fixed rate of about 3.5% a year (roughly 3 percentage points below the market rate), and another for overseas foreign currency borrowings by banks at about 1% below market rates.
- By the close of the 2013 scheme (November 30, 2013), the two windows together had mobilised about $34 billion, with the FCNR(B) window alone contributing roughly $26 billion.
- The 2013 scheme was a direct crisis-response tool to defend the rupee and rebuild foreign exchange reserves after the taper tantrum triggered sharp currency depreciation and capital outflows from India and other emerging markets.
The 2026 concessional swap window is explicitly benchmarked against the 2013 precedent in the article — mobilising over $143.5 billion is described as more than five times the roughly $34 billion raised under the 2013 scheme, making this comparison the clearest testable static-to-current bridge in the news item.
External Commercial Borrowings (ECBs) and Overseas Foreign Currency Borrowings (OFCBs)
ECBs are loans availed by eligible Indian entities from recognised non-resident lenders in foreign currency (or, in the rupee-denominated "Masala Bond" route, INR), regulated by the RBI under the Foreign Exchange Management Act (FEMA), 1999, primarily to supplement domestic capital for permitted end-uses such as infrastructure and capital expenditure. OFCBs refer to foreign currency borrowings raised overseas by Indian banks themselves (as distinct from ECBs raised by corporates/other eligible entities), both of which can be swapped into rupees under RBI's concessional facility to bring in additional forex inflows.
Key Details
- ECBs are governed by the ECB Framework under FEMA, 1999, with borrowing limits, eligible borrowers, and minimum average maturity periods specified by the RBI to prevent excessive short-term external liability build-up.
- Rising global bond yields raise the effective cost of overseas borrowing for Indian entities, which can dampen fresh ECB/OFCB mobilisation even while the concessional swap window remains open until December 31, 2026.
- Distinguishing ECBs (borrowings by corporates and other eligible entities) from OFCBs (overseas borrowings by banks) and from FCNR(B) deposits (NRI retail/term deposits) is central to understanding the composition of the $143.5 billion figure, where NRI deposits (FCNR(B)) dominate over the debt-market-linked ECB/OFCB routes.
The relatively smaller ECB and OFCB contributions to the $143.5 billion total, against the backdrop of rising global bond yields, illustrates how market conditions can constrain debt-based forex inflow channels even when a concessional swap incentive is available, unlike the deposit-based FCNR(B) channel.
- Total inflows under RBI's 2026 concessional forex swap window (as of September 18, 2026): $143.5 billion.
- FCNR(B) deposit contribution: nearly $133 billion (dominant share of the total).
- Window operationalised: June 8, 2026; FCNR(B) fresh deposit mobilisation window closed August 31, 2026 (swaps against such deposits available until September 11, 2026).
- ECB and OFCB window remains open until: December 31, 2026.
- Comparable 2013 FCNR(B)-linked swap scheme (Raghuram Rajan era, post-taper-tantrum): raised about $34 billion in total by November 30, 2013 (about $26 billion via FCNR(B) deposits alone) — the 2026 total is more than five times this figure.
- FCNR(B) Scheme origin: introduced May 1993, replacing the earlier FCNR(A) scheme.