Archive · 2 Sep 2026
RBI Forex Swap Draws $136.37 Billion, Led by FCNR(B)
The Reserve Bank of India created a special program to bring more foreign currency into Indian banks.
People and businesses using three routes brought in about $136 billion by August 31.
Most of the money, about $127 billion, came through FCNR(B) deposits.
These are dollar deposits that eligible people living outside India can place with Indian banks.
The response was much bigger than experts first expected.
Because so much money arrived, the RBI stopped accepting new FCNR(B) deposits earlier than planned.
The money can help India’s reserves, banks and the rupee.
However, the RBI must manage the extra liquidity, and it could face costs or risks if the money later leaves India.
The RBI’s special USD-INR forex swap facility attracted provisional inflows of $136.377 billion by August 31, 2026.
FCNR(B) deposits contributed $127.226 billion, while OFCBs brought in $5.260 billion and ECBs $3.891 billion.
FCNR(B) inflows surged by about $61.8 billion in the final 10 days, from $65.4 billion on August 21.
The RBI closed the window for new FCNR(B) deposits on August 31, one month before the original September 30 deadline.
The inflows may strengthen reserves, banking liquidity and the rupee, but also create sterilisation costs and future reversal risks.
- Who
- The Reserve Bank of India, participating banks, non-resident depositors, overseas investors and foreign-currency borrowers.
- What
- The RBI’s special forex swap facility attracted provisional total inflows of $136.377 billion, led by FCNR(B) deposits.
- When
- The facility was introduced on June 8, 2026; FCNR(B) inflows began on June 23, and the fresh-deposit window closed on August 31, 2026. Existing contracted deposits can use the swap facility until September 11, 2026.
- Where
- Foreign currency was mobilised through Indian banks and the RBI’s USD-INR swap facility.
- Why
- The RBI introduced the facility to attract foreign currency, support reserves and liquidity, and help address pressure on the rupee and external accounts.
Benefits of the Inflows
Costs and Risks
Reserves and external stability
Benefits of the Inflows
Analysts said the mobilisation could strengthen India’s foreign-exchange reserves, improve the balance of payments and give the RBI greater capacity to intervene in the currency market.
Costs and Risks
The inflows create future dollar-denominated liabilities for the RBI, and any eventual reversal could place pressure on the external accounts and currency.
Banking liquidity
Benefits of the Inflows
The funds have augmented banking-system liquidity, increased banks’ near-term funding flexibility and could support credit growth.
Costs and Risks
The larger-than-expected liquidity impact may require durable absorption measures, while sterilising the funds for longer increases the RBI’s marginal costs.
Decision to close FCNR(B) window
Benefits of the Inflows
The strong response demonstrated substantial demand for the facility and brought in far more capital than initial estimates.
Costs and Risks
The RBI closed the window early because each additional dollar provided diminishing marginal benefit and excessive inflows could increase management costs and reversal risks.
- Total mobilisation
- Provisional foreign exchange inflows reached $136.377 billion by August 31, 2026.
- FCNR(B) deposits
- FCNR(B) deposits accounted for $127.226 billion.
- Other channels
- OFCBs contributed $5.260 billion and ECBs contributed $3.891 billion.
- Earlier inflows
- As of August 21, total inflows were $72.85 billion, including $65.4 billion through FCNR(B).
- Window deadlines
- New FCNR(B) deposits closed on August 31; ECB and OFCB windows remain open until December 31, 2026.
- Swap maturity
- Swap agreements run for three to five years, with most funds raised through five-year arrangements.
- Foreign-exchange reserves
- India’s reserves reached a record $729.33 billion in the week ended August 21.
