SBI Research estimates that RBI's latest forex measures could attract $55-65 billion in inflows during FY27, significantly higher than earlier projections. The research firm projects that the FCNR(B) swap facility alone could bring in $40-45 billion, while ECB/OFCB swap windows may garner another $15-20 billion in FY27. As reported by SBI Research, this represents a substantial increase from the $30-60 billion that brokerages had initially estimated for leveraged FCNR(B) deposits. The enhanced projections reflect the broader scope of RBI's coordinated measures announced in February and June 2026 to stabilise the rupee and attract stable foreign capital.
The Reserve Bank of India has revived the FCNR(B) swap window, a mechanism last used during the 2013 rupee crisis. The facility, announced on 8 June 2026, allows banks to mobilise fresh Foreign Currency Non-Resident (Bank) deposits and swap the proceeds with the RBI. The scheme will remain open for deposits mobilised until 30 September 2026, while banks can access the swap facility until 16 October 2026. Under the scheme, authorised dealer banks can mobilise fresh FCNR(B) deposits in any freely convertible currency for a minimum tenor of three years and maximum tenor of five years. The underlying deposits will carry a one-year lock-in period, with banks permitted to offer premature withdrawal based on their internal policies, though swaps executed with the RBI cannot be cancelled. SBI Research notes that drawing parallels with the 2013 FCNR(B) mobilisation scheme, about $24.5 billion had flowed into FCNR(B) deposits in just three months then, and the longer four-month window this time could attract $40-45 billion.
The current interest rate environment presents both opportunities and challenges for the FCNR(B) scheme. SBI Research estimates that banks could offer FCNR(B) deposit rates of 5.5-6%, compared with current three-year US Treasury yields of around 4.2%, making the product attractive for overseas depositors. However, the report notes that the interest rate differential between India and the US has narrowed sharply since 2013. As reported by SBI Research, in 2013, Indian Government bond yields for 3-year tenure was around 8.9% and while the US 3-year treasury yield was 0.9% giving interest differential of 8.0%, but in case of 3 years the rate gap has now reduced to 2.1% and for 5 year it has narrowed down to 2.2%. This narrowing differential reflects the current global interest rate environment and may impact the attractiveness of FCNR(B) deposits compared to historical levels.
The RBI has introduced a concessional swap facility for overseas foreign currency borrowings (OFCBs) to provide banks with cheaper funding options amid challenging deposit mobilisation. According to Banking - Business Standard, the facility is available to all Authorised Dealer Category-I banks, including private sector lenders, for overseas foreign currency borrowings with a minimum maturity of three years. The swap will be undertaken at a fixed rate of 1.5 per cent per annum, compounded semi-annually, and the window will remain open until December 31, 2026. Hedging costs in the market are estimated at around 3.5-4 per cent, implying a reduction of 200-250 basis points under the RBI's concessional swap arrangement. SBI Research estimates that banks could raise $5-8 billion through OFCBs, with funds being 40-50 basis points cheaper than domestic deposits of similar maturity. Through this window, banks can raise funds equivalent to 100 per cent of their Tier-I capital.
The latest data reveals a widened gap between credit and deposit growth to 550 basis points, with loans growing 17.7 per cent year-on-year as of May 31, 2026, compared with 12.2 per cent growth in deposits. SBI Research projects deposit growth of 14.5-15% in FY27 against an estimated credit growth of 16%, which would result in the credit-deposit gap shrinking by around ₹1 lakh crore. The report estimates that the gap could narrow to less than 2% from a peak of 6.7% in FY24. SBI Research further estimates that the additional inflows could transform India's external position, with the overall BoP moving to a surplus of $5-10 billion in FY27 from its earlier projection of a $65-70 billion deficit. The current account deficit is expected to remain in the range of 1.5-1.7% of GDP. The Economic Times reports that banks have responded swiftly, raising FCNR(B) rates by 200-300 basis points to 6-7%, passing on the hedging benefit to depositors.
