RBI Dollar-Rupee Swap Facility Draws $136.38 Billion in Foreign Currency Inflows
New Delhi — India’s banking system attracted $136.38 billion in foreign currency inflows through the Reserve Bank of India’s special dollar-rupee swap facility, with FCNR(B) deposits accounting for most of the total, according to provisional RBI data released Wednesday.
Foreign Currency Non-Resident, or FCNR(B), deposits contributed $127.23 billion through Aug. 31. Overseas foreign currency borrowings accounted for $5.26 billion, while external commercial borrowings brought in another $3.89 billion.
The RBI said the figures are provisional and remain subject to final reporting, accounting and reconciliation.
The facility was introduced June 8 to attract additional foreign currency into India’s banking system and strengthen the country’s external financial buffers.
Inflows accelerated sharply during August. As of Aug. 21, banks had mobilized $65.4 billion through FCNR(B) deposits, while combined inflows from FCNR(B) deposits, external commercial borrowings and overseas foreign currency borrowings stood at about $73 billion.
By the end of August, total mobilization had nearly doubled to $136.38 billion.
Following the strong response, the RBI moved up the closing date for the FCNR(B) deposit mobilization window to Aug. 31 from Sept. 30. The swap facility will remain available through Sept. 11 for eligible FCNR(B) deposits that were already mobilized.
The programs covering external commercial borrowings and overseas foreign currency borrowings will remain open through Dec. 31, 2026, giving banks and eligible borrowers additional time to use the facility.
The increase in longer-term FCNR(B) deposits indicates strong demand among banks for overseas dollar funding, with the swap facility helping reduce the cost and foreign exchange risks associated with raising funds abroad.
The inflows have also affected liquidity conditions in India’s banking system. System liquidity rose to 6.65 trillion rupees on Aug. 31, its highest level since May 2022, while the weighted average call rate fell to 4.98%, below the prevailing repo rate.
The scale of the latest inflows is significantly larger than the response to the RBI’s previous FCNR(B) swap program in 2013, when banks raised about $26 billion through such deposits. (Source: IANS)
