FCNR(B) deposits contribute over 90% of $40.82 bn raised under RBI's forex swap scheme

Foreign Currency Non-Resident (Bank) [FCNR(B)] deposits have emerged as the biggest contributor to the Reserve Bank of India's (RBI) concessional foreign exchange swap facility, accounting for more than 90% of the $40.82 billion mobilised since the scheme was launched in June.

Data released by the RBI on Saturday showed that FCNR(B) deposits stood at $36.725 billion as of July 31, while Overseas Foreign Currency Borrowings (OFCBs) contributed $2.575 billion and External Commercial Borrowings (ECBs) added $1.516 billion. Overall inflows under the special swap window reached $40.816 billion, reflecting strong participation from banks and overseas depositors.

The central bank said the facility has continued to attract steady foreign currency inflows since it became operational on June 8, 2026.

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Why did the RBI launch the scheme

The swap window was announced on June 5 as part of a broader package of measures to encourage foreign currency inflows, strengthen the country's balance of payments and improve liquidity in the banking system. It enables banks to swap foreign currency mobilised through fresh FCNR(B) deposits, OFCBs and ECBs with the RBI at concessional rates.

By lowering the cost of hedging foreign currency exposure, the facility has made overseas fundraising more attractive for lenders. The window for fresh FCNR(B) deposits will remain open until September 30, 2026, while the concessions for OFCBs and ECBs will continue until December 31, 2026.

The overwhelming contribution from FCNR(B) deposits suggests banks have successfully attracted funds from non-resident Indians (NRIs), aided by competitive deposit rates and temporary regulatory relaxations that improve the economics of foreign currency mobilisation.

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Inflows nearly double in two weeks

The latest figures represent a sharp increase from the RBI's previous update on July 17, when cumulative inflows under the facility stood at $20.72 billion. At that stage, FCNR(B) deposits accounted for $17.41 billion, while OFCBs and ECBs contributed $1.97 billion and $1.34 billion, respectively. The latest data show total mobilisation has almost doubled within a fortnight.

Mobilisation estimates

The SBI Research, in its note, has stated that FCNR(B) deposits can reach $65-70 billion by the time the window closes, up from its earlier estimate of $40-45 billion. Including OFCBs and ECBs, total inflows are projected at $80-85 billion.

According to the report, large public sector banks have led the mobilisation drive by leveraging their extensive NRI customer base and overseas presence, while global lenders such as HSBC have also emerged as significant participants. The report added that FCNR(B) deposits maturing in August and September are likely to be rolled over under the new facility, potentially adding another $10 billion to total inflows, supported by the tax advantages associated with these deposits.

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