Archive · 15 Aug 2026
RBI ends diaspora swap facility early after $50 billion inflows
Many people from India live and work in other countries, and these people are called the diaspora.
India's central bank, the RBI, wanted to borrow money from them.
It offered special bank accounts with high interest and promised to cover certain currency risks.
The idea worked better than expected, and more than $50 billion came in.
Because so much money arrived, the RBI decided to end the special offer one month early.
The money helps India when the price of oil goes up, because high oil prices usually weaken India's money, the rupee.
Banks even offered interest rates as high as 7.75% to attract depositors.
This move surprised some traders, who think the bond market may be affected.
However, experts say the effect on the rupee will likely be small and only last a short time.
The RBI will close its FCNR(B) deposit swap facility on Aug. 31, a month earlier than the scheduled Sept. 30 date.
Banks received $52.3 billion through FCNR(B) deposits as of Aug. 13, with total inflows reaching $56.85 billion when other facilities are included.
India has drawn more than $50 billion from its diaspora since June, and total program inflows are still expected to be robust at $70 billion.
The early closure surprised traders after the RBI recently ruled out ending the window early, and could trigger a bond market selloff, especially at the shorter end.
The inflows provide a buffer for the rupee as crude oil prices stay elevated, with banks offering up to 7.75% interest on five-year deposits to attract the 35 million-strong diaspora.
- Who
- The Reserve Bank of India (RBI), commercial banks, India's 35 million-strong diaspora, and economists including Gaura Sen Gupta of IDFC FIRST Bank, Rajeev Pawar of Ujjivan Small Finance Bank and Dhiraj Nim of ANZ.
- What
- The RBI is closing its FCNR(B) deposit swap facility early after drawing more than $50 billion in forex inflows from the diaspora since June.
- When
- Announced in August; the facility, originally set to close on Sept. 30, will now end on Aug. 31, with inflows counted as of Aug. 13.
- Where
- India.
- Why
- The response exceeded the RBI's estimate, and the inflows provide an additional buffer for the central bank as elevated crude oil prices put pressure on the rupee.
- Central bank
- Reserve Bank of India
- FCNR(B) deposit inflows
- $52.3 billion (as of Aug. 13)
- Total forex inflows
- $56.85 billion
- Original closing date
- Sept. 30
- New closing date
- Aug. 31
- Expected total inflows
- $70 billion
- Highest deposit rate offered
- 7.75% on five-year deposits
- Indian diaspora size
- 35 million