The Reserve Bank of India (RBI) has announced a fresh set of measures aimed at boosting foreign currency inflows and strengthening the country’s foreign exchange position, including an extension of the special dollar swap facility for public sector banks and regulatory relief for Foreign Currency Non-Resident (Bank) [FCNR(B)] deposits.
In a key move, the RBI said fresh FCNR(B) deposits mobilised under the special scheme will be exempt from the Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) requirements. The exemption is expected to encourage banks to attract more foreign currency deposits from non-resident Indians.
The central bank also extended its special swap facility for public sector banks until December 31, 2026. The facility is designed to help banks efficiently manage foreign currency inflows while supporting the country’s forex reserves.
Under the scheme, banks can mobilise eligible FCNR(B) deposits between June 8 and September 30, 2026, and avail themselves of the RBI’s swap facility. The scheme itself will remain open until October 16, 2026.
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The RBI said the swap facility would be undertaken at par and would be available for FCNR(B) deposits with maturities ranging from three to five years. Both fresh deposits and deposits renewed on maturity will be eligible under the scheme.
To ensure stability of inflows, FCNR(B) deposits mobilised under the programme will be subject to a mandatory one-year lock-in period. Banks may permit premature withdrawals after one year in accordance with their internal policies. However, swaps undertaken with the RBI cannot be cancelled before maturity.
The facility will be available only in US dollars, even if the underlying deposits are raised in other freely convertible currencies. Under the arrangement, banks will sell US dollars to the RBI and buy back the same amount at the end of the swap tenor. The first leg of the transaction will be settled at the Financial Benchmarks India Pvt Ltd (FBIL) reference rate on a spot basis.
The RBI has also simplified operational requirements by exempting banks from entering into International Swaps and Derivatives Association (ISDA) agreements for availing the facility. Banks will be allowed to access the swap window once every week and can swap eligible FCNR(B) deposits mobilised during the preceding week.
Additionally, banks will retain the flexibility to determine FCNR(B) deposit rates within the existing interest rate ceilings prescribed by the RBI.
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