RBI to End FCNR(B) Swap Facility Early After $50 Billion Inflows
Central bank moves the deadline to August 31 as foreign-currency deposits from non-resident Indians cross expectations.
NEW DELHI, Aug 15: The Reserve Bank of India has decided to close its discounted foreign-exchange swap facility for banks against Foreign Currency Non-Resident (FCNR-B) deposits earlier than scheduled, following a strong response from overseas depositors.
The central bank has brought forward the deadline for the facility to August 31 from September 30. The move comes after the scheme generated more than $50 billion in inflows, strengthening India’s foreign exchange position.
Banks had been allowed to mobilise FCNR(B) deposits from non-resident Indians under the special arrangement, with the RBI offering discounted dollar-rupee swap rates to support the mobilisation of overseas funds.
According to available data, the facility attracted $52.3 billion through FCNR(B) deposits. Additional inflows included $1.7 billion through swap arrangements linked to external commercial borrowings and $2.8 billion through overseas borrowings by authorised lenders.
The RBI’s decision reflects the larger-than-anticipated response to the measures introduced to strengthen the country’s balance of payments and boost foreign currency resources.
While the FCNR(B) window will close earlier, facilities related to external commercial borrowings and overseas borrowings by authorised lenders will remain available until the end of the year.
The substantial inflows are expected to provide additional support to India’s external sector at a time when global financial markets remain sensitive to geopolitical developments and currency movements.
