The Reserve Bank of India (RBI) on Monday unveiled two significant liquidity management measures aimed at stabilising foreign currency inflows and supporting institutions accessing overseas funds. The RBI introduced a US dollar–rupee forex Swap Facility for External Commercial Borrowings (ECBs) and a parallel scheme for fresh FCNR (B) deposits, making a proactive stance in managing external sector risks.
The ECB swap facility is targeted at public sector undertakings (PSUs) under government ownership or established under central or state legislation, as well as Authorised Dealer Category‑I Banks raising Overseas Foreign Currency Borrowings (OFCBs). Eligible borrowings must carry a minimum maturity of three years. The facility will remain open until January 15, 2027, covering drawdowns and flows received up to December 31, 2026. Importantly, the scheme also extends to undrawn portions of existing ECBs, though borrowings with embedded options or those raised for refinancing are excluded. Under this arrangement, banks can sell US Dollars to RBI and repurchase them at the end of the swap period at a fixed premium of 1.5% per cent per annum, compounded semi‑annually. The tenor is capped at five years, aligned to repayment schedules, and operations will be conducted daily. The oversight will rest with the RBI’s Financial Markets Operations Department (FMOD), ensuring compliance with FEMA regulations and the Master Direction on Risk Management.
RBI has also simultaneously opened a swap window for fresh FCNR (B) deposits, effective immediately and available until October 16, 2026. The scheme applies to deposits mobilised between June 8 and September 30, 2026, with a minimum tenor of three years and a maximum of five years. While deposits can be raised in any freely convertible currency, the swap facility with RBI is restricted to US Dollars. Banks must convert non‑dollar deposits into equivalent US Dollar amounts at prevailing market rates, maintaining consistent conversion policies and audit trails. The swap operates at par, with both legs of the transaction undertaken at the FBIL (Financial Benchmark India Private Limited) Reference Rate. Each bank can avail of the facility once a week, capped at the equivalent of fresh deposits mobilised during the preceding weeks. Deposits carry a one‑year lock‑in, though premature withdrawals may be permitted thereafter.
RBI has also exempted banks from maintaining CRR and SLR on fresh FCNR (B) deposits mobilised till September 30, 2026.
Gaura Sengupta, Chief Economist, IDFC First Bank, said, “The FCNR (B) window is expected to draw $40 billion of inflows. RBI will absorb the entire hedge cost which is 3%+. This enables the scheme to be attractive for both banks and NRIs, despite narrow interest rate differentials compared to 2013.” Further adding Anshul Chandok, Head Treasury, RBL Bank said, “There is no currency risk in the current FCNR (B) window. With RBI opening the gates for FPI flows, the opportunity is highly lucrative, especially as rates are expected to settle in the 6–7 per cent range over the next few days.”
By extending support to PSUs, banks, and deposit mobilisation, RBI measures are expected to bolster forex liquidity, hedge risks, and ensuring orderly inflows.
Published on June 8, 2026
