RBI Reports $20.72 Billion Mobilised Under Special Currency Swap Facility

The Reserve Bank of India on Monday reported that its special concessional swap facility, operational since June 8, has drawn $20.72 billion in foreign exchange inflows through July 17. The data, released for the first time since the scheme was launched, showed that Foreign Currency Non-Resident (Bank) deposits contributed $17.406 billion of the total, while Overseas Foreign Currency Borrowings brought in $1.97 billion and External Commercial Borrowings added $1.342 billion.

"The swap facility has seen avid interest and attracted steady forex inflows since June 8, 2026," the RBI said in a statement accompanying the data.

The central bank announced the measures on June 5 as part of a broader package to strengthen India's balance of payments and encourage capital inflows amid global uncertainties. The FCNR(B) window remains open until September 30, while the OFCB and ECB facilities are available through December 31.

**Market Reaction and Outlook**

Economists termed the initial pace encouraging. Gaura Sen Gupta, chief economist at IDFC First Bank, called it a "very healthy start" and said there could be upside risk to her estimate of $50 billion in overall FCNR-B inflows. "Given the pace, there could be upside risk to our estimate of overall FCNR-B inflows of $50 billion due to the scheme," she said, adding that major flows are expected in August and September. For ECB, she maintained an additional inflow estimate of $20 billion.

Anubhuti Sahay, head of India economics research at Standard Chartered Bank, said the inflows are "broadly in line with expectations and the numbers are encouraging." She noted the key will be whether momentum is sustained or accelerates to ensure a "meaningful amount" by end-September.

**Bank-Level Mobilisation**

Several state-run banks have disclosed their individual targets and collections. According to a Business Standard report, the finance ministry has assigned FCNR(B) deposit mobilisation targets to individual state-run banks through September 30. Indian Overseas Bank raised its target to $600-650 million from an earlier $500 million and has so far mobilised $300 million, its managing director Ajay Kumar Srivastava said. Central Bank of India set a target of $400 million.

The Economic Times reported that State Bank of India had mobilised about $1.9 billion in foreign currency, while Bank of Baroda raised $273 million. Canara Bank and Punjab National Bank each raised $80 million. RBL Bank raised $150 million through the FCNR(B) scheme, South Indian Bank $50 million, and Central Bank of India $8.40 million, according to the report.

Punjab National Bank Managing Director and CEO Ashok Chandra expressed optimism about meeting the overall target. "I believe it will. Most of the inflows across the industry are likely to come during the latter half of August and September, so I am optimistic that the overall target can be achieved," he said.

Private sector banks have not disclosed specific numbers but indicated strong interest. ICICI Bank Executive Director Sandeep Batra said the lender has partnered with various parties to provide leverage and is committed to making the initiative a success. Axis Bank Managing Director Amitabh Chaudhry said the scheme is drawing strong interest from NRIs and represents a "meaningful opportunity" to grow deposits.

**Geographic and Structural Dynamics**

Bankers reported strong interest from the Indian diaspora in Singapore, Hong Kong, West Asia, the UK and the US. However, some lenders noted tax-related concerns in certain markets. Federal Bank Managing Director KVS Manian said interest has been more focused on the Middle East, Singapore and Hong Kong, while Australia, the US and the UK are less favourable from a tax standpoint.

Market participants said banks are selectively targeting high-value deposits from NRIs with over $1 million, as smaller leveraged deposits become less feasible due to rising overseas funding costs. The RBI has exempted FCNR(B) deposits mobilised under the scheme from cash reserve ratio and statutory liquidity ratio requirements.

**Historical Context**

The current scheme echoes a similar facility launched in 2013 during the taper tantrum, when Indian banks raised about $34 billion in FCNR(B) deposits over three months. Applying the same penetration rate to the current deposit base would imply potential inflows of roughly $55-60 billion, according to market participants. However, bankers cautioned that a narrower interest-rate differential this time could limit inflows relative to 2013.

The measures come against the backdrop of sustained pressure on the Indian rupee, which has declined to record lows amid rising oil prices following geopolitical tensions. The rupee closed at 96.45 against the dollar on Monday, down 17 paise. Foreign exchange reserves stood at $675.1 billion as of July 10, while the central bank's net forward dollar liabilities were $106.6 billion at end-May.

The RBI said the swap facility has strengthened the balance of payments and will help moderate the pace of rupee depreciation. "We believe the comfort from additional capital flows will lead to a mild BoP surplus for the year and moderate the pace of depreciation in the rupee," IDFC First Bank's Sen Gupta said.