Reserve Bank of India (RBI) has relaxed the access rules for its concessional dollar-rupee swap facility linked to Foreign Currency Non-Resident (Bank) [FCNR(B)] deposits.
Banks can now approach the RBI for swaps above US$100 million even outside their designated weekly window. Earlier, banks could access the facility only on their allotted day and generally only once a week.
The change is intended to make it easier for banks to transfer large foreign-currency inflows to the RBI without unnecessary waiting.
Key Highlights
- Threshold: Transactions above US$100 million can now be undertaken outside the designated weekly window.
- Earlier rule: Banks had specific days on which they could access the swap facility.
- Benefit: Banks that mobilise large FCNR(B) deposits can transfer the funds to the RBI more quickly.
- The RBI’s swap window has contributed to strengthening India’s foreign-exchange liquidity.
- India’s forex reserves reached a record US$729.33 billion as of August 21, 2026.
Inflows under swap facility
By August 21, 2026, the facility had attracted US$72.85 billion in total inflows:
| Source | Inflow |
| FCNR(B) deposits | US$65.40 billion |
| Overseas Foreign Currency Borrowings (OFCBs) | US$4.86 billion |
| External Commercial Borrowings (ECBs) | US$2.59 billion |
| Total | US$72.85 billion |
FCNR(B) deposits therefore accounted for nearly 90% of the total inflows.
Background of RBI Swap Facility
The facility was operationalised on June 8, 2026.
Under the arrangement:
- Banks raise foreign currency through eligible deposits/borrowings.
- They swap that foreign currency with the RBI at the prevailing spot exchange rate.
- The RBI returns the foreign currency at maturity at a concessional cost.
The arrangement helps banks mobilise foreign-currency resources while supporting India’s forex liquidity.
Revised timeline
The FCNR(B) swap facility is available only for deposits mobilised up to August 31, 2026.
- Banks can avail the RBI swap facility until September 11, 2026.
- Earlier, the corresponding deadlines were September 30 for deposit mobilisation and October 16 for availing the swap.
- The scheme for ECBs and OFCBs, however, remains open until December 31, 2026, as originally announced.
What are FCNR(B) Deposits?
FCNR(B) stands for Foreign Currency Non-Resident (Bank) deposits.
These are fixed-term deposits that can be opened in India by:
- NRIs
- Overseas Citizens of India (OCIs)
- Persons of Indian Origin (PIOs)
Unlike NRE and NRO accounts, FCNR(B) deposits are maintained in freely convertible foreign currencies, rather than Indian rupees.
Key Features
- Foreign-currency denomination: Available in currencies such as US dollar, pound sterling, euro, Japanese yen, Australian dollar and Canadian dollar.
- Exchange-rate protection: Since the deposit remains in foreign currency, the depositor is protected from the risk of the rupee depreciating against that currency.
- Full repatriability: Both principal and interest can be taken back to the depositor’s country of residence.
- Tax benefit: Interest is exempt from Indian income tax as long as the depositor qualifies as a non-resident under Indian tax laws.
- Banks can offer interest rates linked to internationally accepted benchmark rates.
Why was FCNR(B) Swap Facility Introduced?
The scheme was introduced when the rupee and India’s foreign-exchange reserves were under pressure, particularly due to the West Asia conflict and rising crude-oil prices.
The RBI arrangement encouraged banks to attract foreign-currency resources from overseas Indians.
Under the scheme, the RBI bears the exchange-rate risk associated with the NRI deposits. This helped banks offer FCNR(B) interest rates as high as 7.4%.
Some NRIs also used bank-provided leverage to potentially earn returns of up to 15%, by borrowing at lower rates and placing the funds in higher-yielding FCNR(B) deposits.
The strong inflow into FCNR(B) deposits indicates substantial participation by NRIs and helps banks secure longer-term foreign-currency resources.
FCNR(B) vs NRE/NRO
| Feature | FCNR(B) | NRE/NRO |
| Currency | Foreign currency | Indian rupees |
| Examples | USD, GBP, EUR, JPY | INR |
| Exchange-rate exposure for depositor | Lower, as deposit remains in foreign currency | Relevant because funds are denominated in INR |
| Repatriability | Principal and interest fully repatriable | Depends on applicable account rules |
| Interest taxation | Exempt for qualifying non-residents | Different tax treatment applies |
India’s Forex Reserves
Foreign-exchange reserves are foreign-currency assets held by a country’s central bank. They act as a financial buffer and help a country meet its external obligations.
Four Major Components
Foreign Currency Assets (FCA)
- The largest component, including assets denominated in currencies such as the US dollar, euro, pound sterling and Japanese yen, often invested in foreign government securities.
Gold Reserves
- Gold held by the central bank as a reserve and safe-haven asset.
Special Drawing Rights (SDRs)
- An international reserve asset created by the International Monetary Fund (IMF) to supplement member countries’ official reserves. SDRs are sometimes called “paper gold.”
Reserve Tranche Position (RTP)
- The portion of a country’s IMF position that can generally be accessed without conditionality. India’s RTP was around US$4.78 billion in early 2025.
Who manages India’s forex reserves?
The RBI is the custodian and manager of India’s foreign-exchange reserves. It manages them under the Reserve Bank of India Act, 1934 and the Foreign Exchange Management Act (FEMA), 1999.