RBI swap facility mobilises $136.38 billion in foreign currency inflows, FCNR(B) deposits dominate

India’s banking system has attracted $136.38 billion in foreign currency inflows through the Reserve Bank of India’s special dollar-rupee swap facility, with FCNR(B) deposits accounting for the bulk of the mobilisation, according to provisional RBI data released on Wednesday.

Foreign currency non-resident (FCNR(B)) deposits contributed $127.23 billion to the total inflows by August 31. Overseas foreign currency borrowings (OFCBs) accounted for another $5.26 billion, while external commercial borrowings (ECBs) brought in $3.89 billion. The RBI said the figures remain provisional and are subject to final reporting, accounting and reconciliation.

The strong mobilisation highlights the exceptionally high response to the facility introduced by the central bank on June 8 with the objective of attracting foreign currency into the Indian banking system and strengthening the country’s external buffers.

The pace of inflows accelerated sharply in August. As of Aug 21, banks had mobilised $65.4 billion through FCNR(B) deposits, while combined inflows through FCNR(B) deposits, ECBs and OFCBs stood at around $73 billion. The subsequent surge pushed total mobilisation to $136.38 billion by the end of August.

Given the strong response, the RBI decided to advance the closure of the FCNR(B) deposit mobilisation window to Aug 31 from the earlier Sep 30 deadline. However, the swap facility for eligible FCNR(B) deposits already mobilised will continue to be available with the RBI until September 11.

The schemes for ECBs and OFCBs will remain open until December 31, 2026, providing banks and eligible borrowers additional time to access the facility through these routes.

The sharp increase in longer-tenure FCNR(B) deposits indicates that banks have been keen to tap overseas dollar funding, particularly as the RBI’s swap facility helped reduce the cost and risks associated with managing foreign currency exposure.

The large-scale mobilisation has also had a significant impact on liquidity conditions in the domestic banking system. Banking-system liquidity rose to ₹6.65 lakh crore on Aug 31, the highest level since May 2022. At the same time, the weighted average call rate declined to 4.98%, moving well below the prevailing repo rate.

The latest mobilisation has also dwarfed the response to the RBI’s earlier FCNR(B) swap scheme introduced in 2013. During that exercise, banks had raised around $26 billion through FCNR(B) deposits.

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