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The RBI's concessional forex swap facility, operational since 8 June 2026, had attracted over $20.7 billion (about Rs 2 lakh crore) in inflows by 17 July 2026.
FCNR(B) deposits contributed the largest share ($17.406 billion), followed by Overseas Foreign Currency Borrowings ($1.97 billion) and External Commercial Borrowings ($1.342 billion).
The RBI absorbs a hedging cost of 280-300 basis points per annum on FCNR(B) deposits, letting banks offer USD deposit rates of 5.5-7.1% versus the earlier 2-4%.
The FCNR(B) window runs until 30 September 2026; the ECB/OFCB windows run until 31 December 2026.
An arrangement where the RBI provides swap cover for eligible foreign-currency liabilities, absorbing the hedging cost so banks can offer more attractive USD deposit/borrowing rates without passing the currency-hedging cost to depositors or borrowers, encouraging capital inflows to support the balance of payments.
Simple Analogy: The RBI effectively insures banks against rupee-dollar swings on these deposits, so banks pass on a better interest rate instead of a hedging charge.
Facility announced
Facility becomes operational
Inflows cross $20.7 billion
FCNR(B) swap window closes
OFCB/ECB swap window closes
After the 2013 'taper tantrum', RBI's special swap windows collectively raised about $34 billion (about $26 billion via the FCNR(B) route alone) at a concessional 3.5% swap rate, to shore up the rupee and the balance of payments — the same structural tool now revived in 2026.
GS Paper III - Indian Economy (Monetary Policy, Balance of Payments, External Sector)
Which of the following best describes the term 'import cover', sometimes seen in the news?
Answer: It is the number of months of imports that could be paid for by a country's international reserves
"Gold Tranche" (Reserve Tranche) refers to
Answer: a credit system granted by IMF to its members
Foreign Currency Non-Resident (Bank) deposits — foreign-currency deposits maintained by NRIs in Indian banks
External Commercial Borrowings — loans raised by eligible Indian entities from non-resident lenders
A unit equal to 1/100th of a percentage point, used to express changes in interest rates