ICICI Bank has successfully mobilised $17.88 billion (₹1.70 lakh crore) through Foreign Currency Non-Resident (Bank), or FCNR(B), deposits under the Reserve Bank of India's special forex swap facility, according to a regulatory filing on Wednesday (September 2). The mobilisation was recorded up to August 31, the cut-off date for fresh FCNR(B) deposits eligible under the facility. As reported by The Hindu BusinessLine, the bank's international branches and subsidiaries provided around $9 billion (₹85,600 crore) in loans against these deposits, while it issued standby letters of credit worth about $3.63 billion (₹34,600 crore) to other banks in connection with loans against such deposits.
The RBI introduced the special USD-INR swap facility in June to encourage banks to mobilise foreign-currency inflows, including through fresh FCNR(B) deposits. According to CNBC TV18, the central bank subsequently allowed banks greater flexibility in accessing the swap facility ahead of the deadline, including permitting swaps outside the regular weekly window for transactions above $100 million. The strong response prompted the RBI to advance the closure of the FCNR(B) window to August 31 from the earlier September 30 deadline. The RBI has stated that swaps against FCNR(B) deposits mobilised by August 31 can still be availed until September 11, 2026. By late August, the FCNR(B) component of the RBI's broader forex swap facility had attracted more than $65 billion, while the overall facility covering FCNR(B) deposits, external commercial borrowings and overseas foreign-currency borrowings had mobilised close to $73 billion, according to Reuters report.
The strong inflows have prompted a significant reset in FCNR(B) deposit rates across major Indian banks. HDFC Bank has reduced its five-year US dollar FCNR(B) rate to 3.15% from 6.25%, a cut of 310 basis points, effective September 1. Similarly, ICICI Bank has cut its five-year dollar deposit rate to 2.90% from 6.00%, also a reduction of 310 basis points. SBI's regular 5-year FCNR(B) rate is now 3.05%, compared with 5.75% offered for deposits of up to $1 million under its Advantage FCNR(B) scheme, implying a 270-basis-point reduction. For deposits above $1 million, SBI had offered 6%, translating into a 295-basis-point difference from the current rate. The sharp reset shows banks rapidly unwinding the premium they were willing to pay for long-duration dollar deposits once the RBI-supported economics of raising such funds disappeared.
