Reserve Bank of India Closes FCNR-B Swap Facility Early

The Reserve Bank of India announced the premature closure of its swap facility for Foreign Currency Non-Resident (Bank) deposits, moving the mobilization deadline from September 30 to August 31, 2026. The central bank cited an encouraging response to the facility, which generated $52.3 billion in FCNR(B) deposits as of August 13. Total inflows across the broader USD-INR forex swap facility, including External Commercial Borrowings and Overseas Foreign Currency Borrowings, reached $56.846 billion.

While the FCNR(B) window is closing early, the RBI confirmed that the ECB and OFCB schemes will remain open until December 31, 2026. Banks may still execute swaps against eligible FCNR(B) deposits until September 11. These facilities were implemented to build a financial buffer against global volatility and geopolitical uncertainties, particularly in West Asia, with the RBI absorbing exchange-rate risk to allow banks to offer interest rates up to 7.5%.

The surge in inflows contributed to a record ₹269.4 trillion in total banking system deposits as of July 31 and helped rebuild foreign-exchange reserves, which rose to a four-month high of $707 billion in the week ended August 7. This decision marks a shift from August 5, when Governor Sanjay Malhotra stated there was no proposal to close the scheme prematurely.