The Reserve Bank of India (RBI) has announced two special US Dollar-Rupee forex swap facilities aimed at attracting foreign currency inflows and bolstering external financing. These measures are designed to enhance the country's external sector buffers amid changing global financial conditions.
Details of the FCNR(B) Swap Facility
The first facility is for fresh Foreign Currency Non-Resident (Bank) [FCNR(B)] deposits. Under this scheme, authorized dealer (AD) Category-I banks can access the swap for deposits mobilized with a minimum tenor of three years and a maximum of five years. The swap will be conducted at par, meaning banks sell US dollars to the central bank and agree to repurchase the same amount at the end of the swap period. The facility is effective immediately and will remain available until October 16, 2026, for deposits mobilized up to September 30, 2026.
ECB and OFCB Swap Facility
The second facility covers eligible External Commercial Borrowings (ECBs) raised by public sector undertakings (PSUs) and Overseas Foreign Currency Borrowings (OFCBs) raised by banks. Eligible ECBs must have an average maturity of three years or more, and OFCBs a minimum maturity of three years. The swap will be conducted at a fixed rate of 1.5 percent per annum compounded semi-annually. This facility will operate daily on working days and remain open until January 15, 2027, for eligible drawdowns and inflows received up to December 31, 2026.
Objectives and Implications
These twin facilities are part of the RBI's strategy to encourage foreign currency inflows, improve hedging options for banks and borrowers, and strengthen the country's external sector. The announcement follows RBI Governor Sanjay Malhotra's monetary policy statement on June 5. By providing these swap windows, the central bank aims to support external financing and mitigate the impact of global financial volatility.
