Archive · 3 Sep 2026
FCNR-B Inflows May Cost RBI ₹2 Lakh Crore
The Reserve Bank of India created a scheme to encourage people and institutions to place foreign-currency deposits with Indian banks.
The scheme attracted $127.23 billion in three months.
The RBI also agreed to help cover the cost of protecting this money from changes in currency values.
Analysts estimate that this support could be worth about ₹2 lakh crore.
However, this is only an estimate, not necessarily the final amount the RBI will lose.
The final cost will depend on how the rupee moves against the US dollar.
The RBI may earn money by investing the new foreign-currency reserves, which could reduce the cost.
Any remaining expense could appear later as a smaller dividend paid to the government.
The RBI’s special package attracted $127.23 billion through FCNR-B deposits over three months.
Analysts estimate the gross hedging or swap cost at $18–19 billion over five years.
The implied cost is roughly ₹2 lakh crore, but it is not a final estimate of economic loss.
The eventual cost will depend on the rupee-dollar exchange rate, reserve earnings and swap settlements.
The expense may emerge through a lower government dividend when deposits mature, potentially around 2031.
- Who
- The Reserve Bank of India, Indian banks and analysts including Payal Pandya and Maahir Mani.
- What
- A special FCNR-B deposit mobilisation package attracted $127.23 billion but may create an estimated ₹2 lakh crore hedging cost for the RBI.
- When
- The inflows occurred over the last three months; the swaps may run for three or five years, with costs potentially appearing around 2031.
- Where
- The scheme applies to foreign-currency deposits held with banks in India.
- Why
- The RBI offered a concessional dollar-rupee swap facility to make FCNR-B deposits more attractive and attract foreign-currency funds.
- Funds attracted
- $127.23 billion through FCNR-B deposits
- Estimated implied cost
- Around ₹2 lakh crore
- Estimated annual hedging cost
- Approximately 2.8%–3.0%
- Estimated gross swap cost
- $18–19 billion over five years
- Potential cost timing
- When deposits mature, potentially around 2031
- Main cost variables
- The USD-INR exchange rate, reserve investment earnings and swap settlement outcomes
- Possible government impact
- A lower dividend from the RBI rather than an upfront fiscal allocation