FCNR (B) deposit are likely to be front loaded under the RBI’s limited period concessional swap window for banks, with the flows estimated in the range of $8-9 billion on systemic level currently
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Yohaan Ashish Varghese _12194
Inflows under the Foreign Currency Non-Resident (Bank) deposit are likely to be front loaded under the RBI’s limited period concessional swap window for banks, with the flows estimated in the range of $8-9 billion on systemic level currently, said SBI’s Economic Research Department (ERD).
The ERD officials noted that built upon the ramparts of the successful 2013 edition (when RBI opened swap window in the nature of a simple buy/sell foreign exchange swap from its side covering just the principal portion of the deposits), but much carefully calibrated by the regulator, this time the FCNR(B) flows are likely to be front loaded this time.
Four reasons
They cited four reasons for the inflows, including entire hedging cost on fresh FCNR(B) deposits (principal) being borne by RBI, providing Banks much respite on cost / spread front.
Further, clarity on SBLC (standby letter of credit) and leverage has been front loaded this time ensuring an early initiation and building of momentum (as against the earlier scheme when 60 per cent of inflows had come in last month).
Referring to a longer runway of four months this time, SBI economists observed that this allows Indian Banks and their foreign counterparts / correspondent banks to take stock of the evolving situation and fine tune / tweak the structure / covenants appropriately.
Moreover, focus in 2026 is more on 5-year mobilisation as compared to 3-years (or, below) mobilisation that was the only option in 2013, ensuring stability in capital flows management and avoid redemption.
The ERD officials noted that despite flows from these sources and good buying seen from FPIs through June’26 especially in debt segment ($7.1 billion) driven by the Government’s offers on tax treatment, the impact on Rupee has not been as expected though FCAs (foreign currency assets) have gone up marginally.
Published on July 13, 2026
