RBI’s Special USD-INR Forex Swap Facility Mobilises $72.85 Billion

RBI’s Special USD-INR Forex Swap Facility Mobilises $72.85 Billion

The Reserve Bank of India (RBI)’s special USD-INR foreign exchange swap facility mobilised $72.85 billion in foreign-currency inflows as of 21 August 2026. The facility was introduced to strengthen foreign-exchange liquidity, improve domestic liquidity conditions and support the orderly functioning of the foreign-exchange market.RBI introduced the special USD-INR forex swap facility on June 8, 2026, covering FCNR(B) deposits, External Commercial Borrowings (ECBs) and Overseas Foreign Currency Borrowings (OFCBs).As of August 21, 2026, authorised dealer banks had reported $72.85 billion in total inflows—$65.397 billion through FCNR(B), $4.860 billion through OFCBs and $2.591 billion through ECBs.FCNR(B) deposits accounted for nearly 90% of the mobilisation, making them the dominant channel under the facility.On August 14, 2026, the RBI advanced the closure of the FCNR(B) mobilisation window from September 30 to August 31, citing the encouraging response and resultant forex inflows.

What is a Forex Swap?

¨     A forex swap involves the exchange of currencies for a specified period with an agreement to reverse the transaction at a predetermined future date and rate.

¨     Under the facility, the RBI receives foreign currency and provides rupee liquidity to banks, while assuming a corresponding forward obligation.

How does the Facility Work?

¨     Banks mobilise eligible foreign-currency resources through FCNR(B) deposits, ECBs and OFCBs and enter them into the swap arrangement with the RBI.

¨     The concessional terms lower the effective cost of hedging these resources, incentivising banks to mobilise additional foreign currency.

¨     Policy Objective: The facility was introduced when the rupee and India’s forex reserves were under pressure, with the objective of augmenting forex liquidity, strengthening domestic liquidity and supporting the foreign-exchange market.

¨     Why FCNR(B) Dominated: The combination of concessional/zero-cost hedging arrangements and attractive deposit rates made FCNR(B) mobilisation particularly attractive, resulting in its overwhelming share of the total inflows.

Significance for India

¨     Strengthening Forex Liquidity: The facility has mobilised substantial foreign-currency resources, improving dollar availability in the domestic financial system and strengthening India’s external liquidity position.

¨     Supporting External Stability: Additional foreign-currency resources provide a buffer against external financing pressures and global financial volatility, complementing India’s existing forex reserves.

¨     Easing Pressure on the Rupee: Greater dollar availability can moderate excess demand for foreign currency and help reduce pressure on the rupee, although the facility does not by itself guarantee rupee appreciation.

¨     Supporting Banking-System Liquidity: The swap provides banks with rupee liquidity against eligible foreign-currency resources, supporting domestic liquidity while enabling the RBI to manage forex liquidity.

¨     Enhancing External Resilience: The mobilisation of foreign-currency resources, alongside India’s substantial reserves, strengthens its capacity to respond to external shocks and volatile capital flows.