RBI Brings Forward FCNR(B) Deposit Swap Deadline Amid Strong Foreign Currency Inflows

The Reserve Bank of India (RBI) has decided to bring forward the deadline for banks to mobilise fresh Foreign Currency Non-Resident (Bank), or FCNR(B), deposits under its special forex swap facility. The deposit mobilisation window will now close on August 31, 2026, one month earlier than the September 30 deadline announced when the facility was introduced.

The central bank’s decision follows a much stronger-than-expected response from banks and overseas depositors. According to the latest figures cited by the RBI, FCNR(B) deposits mobilised through the facility had reached $52.30 billion as of August 13. The substantial inflow has prompted the central bank to modify the timeline after receiving what it described as an encouraging response to the facility.

The special arrangement was introduced on June 8 with the objective of attracting foreign currency into India. Under the facility, eligible banks can use a forex swap arrangement with the RBI against qualifying FCNR(B) deposits. The mechanism was designed to make it easier for banks to manage the foreign currency they raise through these deposits while also supporting foreign exchange inflows into the country.

FCNR(B) Inflows Dominate the Scheme

The scale of the response has been particularly notable because FCNR(B) deposits account for the overwhelming majority of the foreign currency raised through the special measures.

As of August 13, total foreign currency inflows generated through the measures stood at $56.84 billion. Of this amount, FCNR(B) deposits contributed $52.30 billion. Overseas Foreign Currency Borrowings (OFCBs) accounted for $2.80 billion, while External Commercial Borrowings (ECBs) contributed $1.74 billion.

The latest total represents a significant increase from the $40.81 billion recorded as of July 31, highlighting how quickly the inflows gathered pace after the facility was launched.

With the FCNR(B) component alone exceeding $52 billion, the response has been considerably larger than the amount raised through a similar FCNR(B) initiative in 2013. The strong mobilisation has therefore allowed the RBI to shorten the period during which banks can raise deposits under the special swap arrangement.

Swap Window Gets a Separate Deadline

While the deadline for mobilising FCNR(B) deposits has been advanced, banks will still receive additional time to complete the associated swaps with the RBI.

Under the revised arrangement, eligible FCNR(B) deposits must be mobilised by August 31. However, swaps against those deposits can be undertaken with the RBI until September 11, 2026. This creates a gap between the final date for raising deposits and the final date for executing the related swaps.

The distinction is important for banks because the closure of the deposit mobilisation window does not mean that all swap transactions must be completed on the same day. Deposits raised within the revised eligibility period can continue to be covered through the facility until the September 11 swap deadline.

At the same time, the RBI has not changed the timeline for the other components of the special forex measures. Swap arrangements linked to ECBs and OFCBs will continue according to the original schedule, with those facilities remaining available until December 31, 2026.

Earlier Than Expected

The decision marks a change from the earlier position on the FCNR(B) window. When the scheme was initially announced, banks were expected to mobilise eligible deposits until September 30.

The RBI's latest move reflects the rapid accumulation of foreign currency through the programme. Rather than keeping the FCNR(B) deposit window open for the entire originally planned period, the central bank has chosen to end mobilisation earlier after the facility attracted substantial participation.

The development also comes after recent comments from RBI Governor Sanjay Malhotra indicated that there was no proposal at that point to shut the facility prematurely. The subsequent decision to advance the deadline highlights how quickly the inflow situation changed as the programme continued to attract deposits.

What the Change Means for Banks

For banks, the revised timeline means the remaining period to attract eligible FCNR(B) deposits is shorter than originally expected. Institutions looking to use the special swap arrangement will therefore need to complete deposit mobilisation by August 31.

The RBI's decision also signals that the central bank considers the response to the FCNR(B) component sufficiently strong to warrant an earlier closure. The $52.30 billion mobilisation by August 13 represents the main portion of the $56.84 billion raised across the three channels covered by the special measures.

For the foreign exchange market, the development underlines the scale of overseas currency inflows generated through the initiative. The RBI has retained the separate swap window through September 11 for FCNR(B) deposits already mobilised within the eligible period, while allowing the ECB and OFCB-related facilities to continue until the end of the year.

The immediate change, therefore, is focused specifically on FCNR(B) deposit mobilisation. With the new August 31 deadline approaching, banks have less time to bring in fresh eligible deposits, even though the associated RBI swaps will remain available for a further period.