RBI Launches USD-Rupee Forex Swap Facility to Support FCNR(B) Deposit Mobilisation
The Reserve Bank of India has rolled out a structured foreign exchange swap mechanism aimed at encouraging Authorised Dealer Category-I banks to mobilise fresh Foreign Currency Non-Resident (Bank) — commonly referred to as FCNR(B) — deposits from overseas depositors. This initiative, formalised through a circular bearing reference RBI/2026-27/99 FMOD.MAOG.No.S-56/01.06.016/2026-27 dated June 8, 2026, follows the Governor's Statement of June 5, 2026, and signals a deliberate policy push to strengthen foreign currency inflows into the Indian banking system.
Background and Policy Rationale
India's external sector management periodically calls for targeted interventions to boost foreign currency liquidity. The FCNR(B) deposit scheme has historically served as a reliable instrument to attract stable, long-tenor foreign currency resources into the domestic banking system. By introducing a US Dollar-Rupee Forex Swap Facility, the RBI has provided AD Category-I banks with a hedging mechanism that reduces the exchange rate risk associated with mobilising and deploying foreign currency deposits — thereby incentivising banks to actively court non-resident depositors for medium-to-long-term commitments.
This facility is time-bound, operative for deposits mobilised between June 8, 2026 and September 30, 2026, and the swap window itself remains open through October 16, 2026.
Scope and Eligibility
Who Can Avail This Facility?
The swap facility is exclusively available to Authorised Dealer Category-I banks operating in India. These are banks duly licenced by the RBI to undertake the full range of foreign exchange transactions under the Foreign Exchange Management Act framework.
Which Deposits Qualify?
- Fresh FCNR(B) deposits mobilised in any freely convertible currency
- Deposits renewed upon maturity also qualify under this scheme
- The deposit tenor must be a minimum of three years and a maximum of five years
Important Note: While deposits may be denominated in any freely convertible foreign currency, the swap facility with the RBI will be conducted exclusively in US Dollars. Banks holding eligible deposits in other permissible foreign currencies must first convert the equivalent amount into US Dollars at prevailing market rates on the date of the swap transaction.
Key Operational Features of the Swap Facility
1. Swap Tenor and Rate
The tenor of each swap transaction must precisely align with the tenor of the underlying FCNR(B) deposit. This ensures a clean matching of assets and liabilities from an exchange risk perspective.
Transactions under this facility will be executed at par, using the FBIL Reference Rate as the applicable benchmark for both legs of the swap.