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The Reserve Bank of India's special USD-INR forex swap facility, launched on 8 June 2026 for FCNR(B) deposits, Overseas Foreign Currency Borrowings and External Commercial Borrowings, had mobilised USD 73 billion as on 21 August 2026.
FCNR(B) deposits alone accounted for USD 65.40 billion of that total.
The Ministry of Finance describes it as the largest and fastest foreign-currency mobilisation India has undertaken, surpassing the RBI's 2013 FCNR(B) swap scheme, which raised about USD 26 billion over roughly three months.
The response was strong enough for the RBI to advance the closure of the FCNR(B) window from 30 September to 31 August 2026.
The government frames the inflow as strengthening India's external buffers at low cost, and as evidence of non-resident Indian confidence in the domestic banking system.
A bank that raises dollars abroad — through an FCNR(B) deposit, an overseas borrowing or an ECB — faces a currency mismatch: it owes dollars but lends rupees. Hedging that exposure in the market is expensive, and when the rupee is under pressure the cost rises exactly when the inflow is most needed. A central bank swap window solves this: the RBI takes the dollars from the bank now against rupees, and commits to return them at an agreed rate on maturity. The bank gets its rupee funding without buying a market hedge; the RBI gets dollars into its reserves for the life of the swap; and the exchange-rate risk sits with the central bank at a price it sets. The design is deliberately temporary — a window with an opening and a closing date, aimed at a specific mobilisation target, which is why the RBI could bring its closure forward once the target was met.
Simple Analogy: Like a bank agreeing in advance to buy back your foreign currency at a fixed rate on a fixed date, so you can spend the rupees today without worrying what the rate will be then.
| Feature | FCNR(B) | NRE | NRO |
|---|---|---|---|
| Currency held in | Foreign currency | Indian rupees | Indian rupees |
| Type of account | Term deposit only, tenor 1 to 5 years | Savings, current or term | Savings, current or term |
| Who bears exchange-rate risk | The bank, not the depositor — principal and interest stay in the chosen foreign currency | The depositor, since the deposit is converted to rupees | The depositor |
| Source of funds | Foreign earnings remitted from abroad | Foreign earnings remitted from abroad | Income earned in India, such as rent, dividends or pension |
| Repatriability | Principal and interest freely repatriable | Freely repatriable | Restricted, subject to limits and tax clearance |
| Tax on interest | Exempt from Indian income tax while the holder is a non-resident under FEMA | Exempt while non-resident | Taxable in India |
Attract non-resident savings in foreign currency
Key: Term deposits held in permitted foreign currencies by NRIs and Overseas Citizens of India with authorised banks in India, for tenors of one to five years. Because the deposit stays in foreign currency, the depositor carries no rupee-depreciation risk; interest is exempt from Indian income tax while the holder remains a non-resident under FEMA.
Let eligible Indian entities borrow from recognised non-resident lenders
Key: Commercial loans raised abroad by eligible resident entities, governed by RBI regulations under the Foreign Exchange Management Act, 1999, and available through an automatic route where prescribed parameters are met, or an approval route requiring prior RBI permission.
Allow banks to raise foreign currency funds overseas
Key: Foreign currency borrowing by banks themselves, as distinct from ECB raised by corporate borrowers — the third leg the swap window covered alongside FCNR(B) and ECB.
Arrest a sharp fall in the rupee during the taper tantrum
Key: The precedent the release names: the RBI swapped dollars raised by banks through FCNR(B) deposits of three years and above into rupees at a concessional rate, mobilising about USD 26 billion over roughly three months.
The statute governing foreign exchange transactions, non-resident accounts and external borrowings. Whether a person is 'non-resident' — which determines eligibility for FCNR(B) and the tax treatment of its interest — is decided under FEMA's residency test.
Constitutes the RBI and underpins its management of India's foreign exchange reserves and its market operations, including swap facilities.
The consolidated regulatory instrument setting the parameters — eligible borrowers, minimum maturity, permitted end-uses and cost — under which ECB may be raised through the automatic or approval route.
FCNR(B) deposits and ECB are capital account inflows; they finance a current account deficit but create a future repayment obligation, unlike export earnings or equity inflows.
A central bank cannot simultaneously fix the exchange rate, allow free capital movement and run an independent monetary policy. Swap windows are a way of managing the tension — attracting capital and cushioning the currency without formally pegging it.
India is consistently among the world's largest recipients of remittances, and the same diaspora base that sustains those flows is what a FCNR(B) window targets — though remittances are current account transfers while FCNR(B) deposits are capital account liabilities.
Reserves are usually assessed as months of import cover and against short-term external debt; a large FCNR(B) build-up improves the headline number but adds to the liabilities the reserves are measured against.
General Awareness > RBI, Forex and Non-Resident Deposits
GS Paper 3 > Indian Economy > External Sector, Balance of Payments
General Awareness > Economy
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
High for banking exams; moderate for UPSC, where it enters through balance of payments and external debt.
Foreign Currency Non-Resident (Bank) term deposit — held in permitted foreign currencies by NRIs and OCIs with authorised banks in India, for one to five years.
An exchange of one currency for another now, with an agreed reverse exchange at a set rate on a future date.
Commercial loans raised by eligible Indian entities from recognised non-resident lenders, under RBI regulations made under FEMA, 1999.
Foreign currency funds raised abroad by banks themselves, as distinct from ECB raised by corporates.
The 2013 market episode in which signals of a wind-down in US Federal Reserve bond purchases triggered capital outflows from emerging markets, prompting India's FCNR(B) swap window of that year.