Banks have mobilised $20.7 billion so far under the Reserve Bank of India's special forex swap window, which was opened last month to boost capital inflows and strengthen the country's external sector by allowing the central bank to bear the hedging costs.
The limited-period facility, announced on June 5 and operationalised on June 8, enables banks and other eligible entities to raise foreign currency funds through fresh Foreign Currency Non-Resident (Bank) [FCNR(B)] deposits, Overseas Foreign Currency Borrowings (OFCBs) and External Commercial Borrowings (ECBs).
"Various entities have mobilised $20.7 billion so far under the forex swap window. While FCNR(B) deposits stand at $17,406 million, inflows through OFCBs are at $1,970 million and ECBs at $1,342 million, taking the total mobilisation to $20,718 million," the RBI said on Monday.
The FCNR(B) deposits account for more than 84% of the total inflows mobilised under the scheme so far.
The RBI said the swap facility has attracted steady forex inflows since becoming operational on June 8. The concessional swap window for FCNR(B) deposits is available until September 30, while the OFCB and ECB windows will remain open until December 31, 2026.
The special facility was introduced with a view to strengthening the balance of payments, which has remained in deficit for the third consecutive year, and incentivising capital inflows.
The window has now completed more than half of its tenure for FCNR(B) deposits. Analysts had initially projected inflows of $60-80 billion under the scheme, but have since lowered their estimates to $30-50 billion amid rising overseas interest rates and regulatory curbs in some key NRI markets such as the UAE on excessive leverage.
Private sector banks, which have a large non-resident Indian customer base, remain relatively more optimistic about garnering deposits under the scheme.