The Reserve Bank of India has relaxed access to its dollar-rupee swap facility beyond the weekly window for FCNR(B) deposits above $100 million, as reported by Business Standard. This move comes ahead of the August 31 deadline for the special deposit scheme, allowing banks to handle large inflows more efficiently. Under the new arrangement, banks can now access the concessional swap facility the same day for transactions exceeding $100 million, without waiting for their designated weekly window. The earlier arrangement assigned specific days of the week to banks and allowed swaps only once a week, resulting in a lag between mobilisation and transfer of funds to the RBI. The RBI's message aims to help banks manage a likely surge in dollar liquidity and prevent sudden build-up of excess dollars in the banking system.
The Reserve Bank of India's USD-INR swap facility has mobilised $73 billion in forex inflows by August 21, 2026, with $65.40 billion coming through FCNR(B) deposits alone. As reported by the latest RBI data, this represents a remarkable achievement that has exceeded expectations and surpassed the scale of the RBI's previous FCNR-B swap scheme from 2013. The 2026 facility mobilised this amount in under 11 weeks, compared to the 2013 scheme which raised about $26 billion over approximately three months. The strong response has led the RBI to advance the closure of the FCNR-B window from September 30 to August 31, 2026, after the stated objective was achieved ahead of schedule. The swap facility is available for FCNR(B) deposits mobilised only till August 31, with banks permitted to avail of swaps with the RBI till September 11, compared with the original schedule of September 30 for deposit mobilisation and October 16 for availing the swap facility.
Despite the unprecedented dollar mobilisation, the Indian rupee has given back much of its initial post-announcement gains despite the record inflows. As reported by Bloomberg, the currency was at 94.94 per US dollar on June 5 when the RBI announced the measures, having strengthened sharply from the previous close of 95.79. By August 31, the rupee was trading around 95.45 per dollar, after ending the previous week at 95.39 against the greenback. This means the Indian rupee has given back much of its initial post-announcement gains despite the unprecedented dollar mobilization. According to ANZ economist Dhiraj Nim, "FCNR(B) inflows have not directly addressed the underlying demand for dollars in the market" because they have been directly swapped with the RBI. The rupee's recent stability has been largely due to RBI's dollar selling through the non-derivable futures and spot markets, rather than FCNR-B inflows directly supporting the currency.
Indian banks are now shifting focus towards borrowing in overseas foreign currencies to meet their fundraising requirements, as reported by The Economic Times. This strategic pivot comes in light of an advanced deadline on August 31 that altered original plans tied to deposit-linked fundraising. With the Reserve Bank of India (RBI) moving the timeline forward, many lenders have revised their bond issuance approaches, with the December 31 OFCB deadline remaining unaltered. The Ministry of Finance attributes the strong response to the confidence of the Indian diaspora in the country's banking system and economy, noting that the mobilisation demonstrated continuing participation of non-resident Indians in India's economic growth.
With the FCNR-B mobilisation window now closed, the rupee's trajectory is likely to depend more on crude oil prices, global dollar conditions and the RBI's intervention. IDFC FIRST Bank expects the rupee to trade at around 96 per dollar by December end and 96.5 by March 2027. Karur Vysya Bank's VRC Reddy expects FCNR-B mobilization to reach $80 billion, with total foreign-currency resource mobilization potentially nearing $100 billion, including OFCBs and ECBs. He expects the currency to trade in the 94.5-96.5 range in 2026, with a near-term appreciation bias. Bank of Baroda's Madan Sabnavis expects the rupee to remain range-bound at 95-95.5 in the near term, as the dollars mobilized through the scheme do not directly enter the market. The scheme has materially strengthened India's external liquidity buffer, with India's foreign exchange reserves standing at $729 billion as of August 21, up from $681 billion as of June 5.
