India’s FCNR(B) Deposits Surge 86% Amid RBI Forex Swap Facility
The Indian rupee has seen a significant boost in recent weeks, with the outstanding FCNR(B) deposits rising by nearly 86% to $60,548.72 million as of July 30, 2026, from $32,558.50 million on June 5, 2026, following the Reserve Bank of India’s announcement of the USD-INR forex swap facility for fresh deposits.
Government Aims to Attract Stable Foreign Currency Inflows
Minister of State for Finance Pankaj Chaudhary stated that the forex swap facility for fresh FCNR(B) deposits is intended to attract stable foreign currency inflows, strengthen India’s balance of payments, and help ease recent pressures on the Indian rupee.
Chaudhary explained that the fresh FCNR(B) deposits mobilised by banks will be swapped with the RBI, increasing foreign exchange reserves and banking system liquidity after the first leg of the transaction, which will be reversed on maturity, the second leg of the transaction.
Key Factors Influencing Foreign Exchange Reserves and Liquidity
The increase in foreign exchange reserves and banking system liquidity will depend on the total amount of foreign currency mobilised under the forex swap facility during the period, according to the Minister of State for Finance.
Market Impact and Details
- The Reserve Bank of India’s dollar swap facility received a total of $40.8 billion till July 31, with FCNR-B deposits standing at $36.7 billion, as per the latest data from the RBI.
- SBI Research has projected that the total FCNR(B) deposits could reach $65-70 billion by the end of the scheme, with overall inflows expected to touch $80-85 billion, including OFCBs and ECBs.
Key Takeaways
- The outstanding FCNR(B) deposits have risen by nearly 86% to $60,548.72 million as of July 30, 2026, following the Reserve Bank of India’s announcement of the USD-INR forex swap facility.
- The government aims to attract stable foreign currency inflows, strengthen India’s balance of payments, and ease recent pressures on the Indian rupee through the forex swap facility.
- The increase in foreign exchange reserves and banking system liquidity will depend on the total amount of foreign currency mobilised under the forex swap facility during the period.
FAQs
What is the purpose of the forex swap facility for fresh FCNR(B) deposits?
The forex swap facility for fresh FCNR(B) deposits is intended to attract stable foreign currency inflows, strengthen India’s balance of payments, and help ease recent pressures on the Indian rupee.
How will the fresh FCNR(B) deposits mobilised by banks be swapped with the RBI?
The fresh FCNR(B) deposits mobilised by banks will be swapped with the RBI, increasing foreign exchange reserves and banking system liquidity after the first leg of the transaction, which will be reversed on maturity, the second leg of the transaction.
What is the expected total FCNR(B) deposits by the end of the scheme?
SBI Research has projected that the total FCNR(B) deposits could reach $65-70 billion by the end of the scheme, with overall inflows expected to touch $80-85 billion, including OFCBs and ECBs.
Conclusion
The recent surge in FCNR(B) deposits is a positive sign for the Indian economy, with the government’s efforts to attract stable foreign currency inflows and strengthen the balance of payments yielding promising results. As the scheme continues to mobilise foreign currency, it is expected to have a significant impact on the country’s foreign exchange reserves and banking system liquidity. To stay updated on the latest developments, consider subscribing to The Economic Times Prime and reading the ET ePaper online.
