3 min readMumbaiAug 2, 2026 09:01 AM IST
The Reserve Bank of India’s (RBI) concessional swap facility has attracted foreign exchange inflows worth over $40 billion in less than two months, reflecting strong overseas investor and depositor response to the central bank’s liquidity-enhancing measure.
The RBI on Saturday said total inflows mobilised under the special facility stood at $40.816 billion as on July 31, 2026. Of this, Foreign Currency Non-Resident (Bank) — FCNR(B) — deposits accounted for the largest share at $36.725 billion, followed by Overseas Foreign Currency Borrowings (OFCBs) at $2.575 billion and External Commercial Borrowings (ECBs) at $1.516 billion.
The central bank had announced the concessional swap facility on June 5, 2026, to encourage fresh foreign currency inflows and support domestic liquidity. The scheme became operational on June 8, 2026.
Under the facility, the RBI offers concessional swap arrangements for fresh FCNR(B) deposits mobilised by banks as well as eligible OFCB and ECB inflows. The swap window for FCNR(B) deposits will remain open until September 30, 2026, while the facility for OFCBs and ECBs will continue until December 31, 2026.
FCNR(B) deposits are fixed-term bank deposits that can be opened in India by NRIs, Overseas Citizens of India (OCIs) and Persons of Indian Origin (PIOs). These deposits allow overseas Indians to maintain their savings in designated foreign currencies such as the US dollar, pound sterling, euro, Japanese yen, Australian dollar and Canadian dollar, rather than converting their funds into Indian rupees. Interest earned on FCNR(B) deposits is exempt from income tax in India as long as the depositor qualifies as a non-resident under Indian tax laws. Under the current framework, banks can offer rates linked to internationally accepted benchmark rates.
With two months to go for the scheme’s closure, experts are expecting $70-80 billion inflows.
The scheme was introduced to stabilise the rupee and foreign exchange reserves of the country which came under pressure due to the West Asia conflict and rise in crude oil prices. The overwhelming contribution from FCNR(B) deposits indicates strong participation by non-resident Indians, helping banks mobilise long-term foreign currency resources at a time when the RBI is seeking to bolster foreign exchange liquidity.
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According to an UBS report, over the past week, some investors have questioned the validity of these inflow estimates, given that they are not yet fully reflected in the RBI’s reported foreign currency assets (FCA), banking system liquidity conditions, or bank deposit growth data. “The RBI has explicitly stated that the scheme applies to fresh FCNR(B) deposits, including deposits renewed upon maturity, implying that a part of the reported mobilisation may reflect the rollover of existing FCNR(B) deposits under more attractive terms,” UBS said.
“We believe the RBI also likely absorbed part of these inflows to unwind portions of its sizeable forward forex book (which stood at $106.7 billion as of end May), particularly at shorter maturities. Since June 5, foreign currency assets (FCA) have increased by $7.6 billion through July 17, while bank deposit growth has remained relatively modest at 12.7% year-on-year in the fortnight ended July 15, 2026,” it said.
