Archive · 3 Sep 2026
RBI Forex Swap Attracts $136.4 Billion, Led by FCNR(B)
The Reserve Bank of India created a special program to bring more foreign currency into the country.
The program allowed Indian banks to collect foreign-currency deposits from people living abroad.
It also covered loans and bonds that Indian entities raise overseas.
By August 31, the program had attracted about $136.4 billion.
Most of the money, about $127.2 billion, came from FCNR(B) deposits.
The strong response led the RBI to close that part of the program one month early.
The loan and bond parts will remain open until December 31, 2026.
Analysts said the money gives banks more funds, but banks may find it difficult to lend all of it profitably.
The RBI said the figures are provisional and may change after final checks.
The RBI’s special USD-INR forex swap facility attracted $136.377 billion in inflows by August 31, 2026.
FCNR(B) deposits accounted for $127.226 billion, or more than 93% of the total.
Overseas foreign-currency borrowings contributed $5.260 billion, while external commercial borrowings added $3.891 billion.
The FCNR(B) window closed on August 31, a month earlier than planned, following strong demand from overseas depositors.
Analysts said the inflows strengthened bank liquidity but could pressure loan yields, margins, and the RBI’s future dividend income.
- Who
- The Reserve Bank of India, Indian banks, overseas depositors including the Indian diaspora, and Indian entities raising funds abroad.
- What
- A special USD-INR forex swap facility attracted $136.377 billion in foreign-currency inflows, largely through FCNR(B) deposits.
- When
- The facility was announced on June 8, 2026, and the reported inflows were measured through August 31, 2026.
- Where
- India, through Indian banks and overseas funding markets.
- Why
- The facility was introduced to attract dollar flows, strengthen India’s external-sector position, support foreign-exchange liquidity, and help shield the rupee amid global market uncertainties.
Benefits and liquidity support
Risks and financial costs
Impact on banks
Benefits and liquidity support
The large FCNR(B) inflows significantly strengthened Indian banks’ liquidity buffers and could support system-wide liquidity.
Risks and financial costs
Banks may take time to deploy the funds profitably, potentially increasing competition for quality borrowers and lowering loan yields and margins.
Impact on monetary liquidity
Benefits and liquidity support
The stronger-than-expected mobilisation could give the RBI greater flexibility because the banking system has received substantial foreign-currency inflows.
Risks and financial costs
Analysts said the liquidity surge could require the RBI to use tools such as forex sell-buy swaps, the Market Stabilisation Scheme, or possibly an Incremental Cash Reserve Ratio.
Long-term cost
Benefits and liquidity support
The facility attracted foreign funds and helped meet its inflow objective ahead of schedule.
Risks and financial costs
The funds represent a future dollar-denominated debt liability and could indirectly reduce RBI dividends, with one analyst estimating a cumulative fiscal cost of more than Rs 1 lakh crore.
- Total inflows
- $136.377 billion as of August 31, 2026
- FCNR(B) deposits
- $127.226 billion, accounting for more than 93% of total inflows
- OFCB inflows
- $5.260 billion
- ECB inflows
- $3.891 billion
- FCNR(B) window
- Closed on August 31, 2026, instead of the planned September 30 closing date
- Remaining facility
- The ECB and OFCB components remain open until December 31, 2026
- Data status
- The RBI described the figures as provisional and subject to final reporting, accounting, and reconciliation
