Reserve Bank of India (RBI)’s concessional forex swap facility attracted more than $20.7 billion (around ₹2 lakh crore) in foreign exchange inflows

Reserve Bank of India (RBI)’s concessional forex swap facility attracted more than $20.7 billion (around ₹2 lakh crore) in foreign exchange inflows

¨     Reserve Bank of India (RBI)’s concessional forex swap facility attracted more than $20.7 billion (around ₹2 lakh crore) in foreign exchange inflows by 17 July 2026.

¨     The facility was announced on 5 June 2026 and became operational on 8 June 2026.

¨     It aims to strengthen India’s Balance of Payments (BoP) and encourage foreign capital inflows.

¨     A forex swap facility is a foreign exchange arrangement in which the central bank provides swap cover for eligible foreign currency liabilities.

¨     Under this facility, the RBI bears the full hedging cost for certain foreign currency inflows.

¨     This reduces the cost of raising foreign currency funds for banks and depositors.

¨     Foreign Currency Non-Resident (Bank) deposits [FCNR(B)] accounted for the largest share of inflows.

¨     FCNR(B) deposits contributed $17.406 billion to the total inflows.

¨     Overseas Foreign Currency Borrowings contributed $1.97 billion.

¨     External Commercial Borrowings (ECBs) added $1.342 billion during the same period.

¨     The RBI absorbs a hedging cost of around 280–300 basis points per annum for FCNR(B) deposits.

¨     This arrangement enabled banks to offer USD deposit rates of 5.5% to 7.1%.

¨     Earlier, USD deposit rates were in the range of 2% to 4%.

¨     The facility helps strengthen India’s foreign exchange reserves and attract foreign currency inflows.