Dollar deluge: RBI’s forex scheme draws $136.37 billion

Foreign exchange inflows through the special USD-INR Forex Swap facility of the Reserve Bank of India have crossed $136 billion, far exceeding the initial expectations of both the government and bankers. The robust capital inflows are set to give comfort to the Indian rupee, which has been under pressure by boosting foreign exchange reserves.

Data released by the RBI on Wednesday revealed that there have been steady capital inflows into the country through the scheme to amount to $136.37 billion by August 31, 2026. Of this, the Foreign Currency Non-Resident (Bank) or FCNR (B) deposits registered the most inflows, crossing the $100 billion mark to $127.2 billion.

READ THIS: RBI's forex swap facility draws massive $127 billion through FCNR(B) deposits

The initial expectation was that the scheme would bring in about $50-$60 billion, which was later increased to $80 billion. The RBI also chose to close the window for fresh FCNR (B) deposits earlier by a month on August 31, from the initial September 30. However, the swaps under this facility may be availed with RBI till September 11, 2026.

Meanwhile, Overseas Foreign Currency Borrowings (OFCBs) and External Commercial Borrowings (ECBs) also saw robust inflows till August 31, the RBI data showed. While OFCBs brought in $5.26 billion, ECBs attracted $3.89 billion.  The scheme will be open up to December 31, 2026 for ECBs and OFCBs.

As the West Asia conflict had continued and a falling rupee and higher prices of oil and energy imports had begun to impact the economy, the RBI had introduced the special USD-INR forex swap facility on June 8, covering FCNR(B) deposits, ECBs, and OFCBs to help boost foreign exchange reserves.

The data is provisional and subject to revision.

Simply put, FCNR (B) deposits are a foreign currency fixed deposit that can be held by Non-Resident Indians, Overseas Citizens of India and Persons of Indian Origin. The funds and interest earned are tax-free in India and are fully repatriable.

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“The inflows have provided a material fillip to India’s foreign reserves, which had been on a declining trajectory since February 2026 and had fallen about 5% by 5 June. At nearly 18% of the outstanding foreign exchange reserve stock immediately preceding the scheme’s announcement, the reported $100billion mobilisation is sufficiently large to reverse this trend and lift the headline reserve balance,” said a report by Macquarie. Beyond strengthening the external-sector cushion, the inflows have replenished the RBI’s capacity to intervene in the foreign-exchange market, providing greater ammunition to stabilise the rupee and arrest its decline, at least for the time being, it further said.

Strong inflows from FCNR(B) are seen to have also helped deposit mobilisation by banks and bank deposits grew 14.7% y-o-y as of August 15, 2026 and is expected to help credit growth as well as balance of payments.

“The strong mobilisation under the scheme has augmented banking system liquidity and provided banks with greater near-term funding flexibility. At the same time, the RBI’s decision to shorten the hedging window to August 31 from September 30 reflects the stronger-than-anticipated response,” a recent note by CareEdge Ratings had said.