RBI Shuts FCNR(B) Forex Swap Early After $52.3B Rush

The Reserve Bank of India (RBI) has decided to close its special forex swap facility for fresh Foreign Currency Non-Resident (Bank), or FCNR(B), deposits prematurely on August 31, 2026, after an “encouraging response” brought in $52.3 billion through that route. The central bank announced the move on August 14, 2026.

The early closure marks a sharp pullback from the original September 30 deadline, reflecting how quickly banks and non-resident depositors piled into the concessional scheme launched barely two months earlier.

Contents

01

What the facility was

02

Why the window is closing early

03

What banks can still do

04

The full picture of inflows

What the facility was

The RBI introduced the special US dollar-rupee forex swap facility on June 8, 2026. It allowed banks to mobilise fresh three-to-five-year FCNR(B) deposits and swap those deposits with the central bank at a concessional rate, effectively covering the hedging cost for banks.

The RBI had also temporarily withdrawn the interest rate ceiling on fresh FCNR(B) deposits of three-to-five-year tenors until September 30, 2026, giving banks room to offer more attractive returns to non-resident depositors.

Why the window is closing early

The decision followed robust accretion of $52.30 billion in FCNR(B) deposits between June 8 and August 13, 2026. The RBI said the move was based on the encouraging response to the swap facility and the resulting forex inflows.

Under the revised timeline, the concessional swap facility will now be available only for FCNR(B) deposits of three-to-five-year maturity mobilised until August 31, 2026, against the earlier deadline of September 30, 2026.

What banks can still do

Swaps against FCNR(B) deposits mobilised under the facility can be undertaken with the RBI until September 11, 2026, compared with October 16, 2026 earlier. This gives banks a brief window after the deposit deadline to complete the swap transactions.

The schemes for External Commercial Borrowings (ECBs) and Overseas Foreign Currency Borrowings (OFCBs) will continue to remain open until December 31, 2026.

The full picture of inflows

Authorised dealer banks reported total foreign currency inflows of $56.846 billion under the three components of the special forex facility as of August 13, 2026. FCNR(B) deposits accounted for the overwhelming majority at $52.3 billion, followed by OFCBs at $2.805 billion and ECBs at $1.741 billion.

The concentration of inflows in FCNR(B) deposits explains why the RBI moved to close that particular window early while leaving the ECB and OFCB schemes open through the end of the year.