With inflows through FCNR(B) deposits under the USD-INR Forex Swap facility touching $52.3 billion as of Friday, the Reserve Bank of India has decided to close the special facility a month earlier than scheduled, on August 31 instead of September 30.
Together with the other two components of the scheme—Overseas Foreign Currency Borrowings (OFCBs) and external commercial borrowings (ECBs)—total inflows under the special USD-INR Forex Swap facility have reached $56.85 billion. Inflows through OFCBs stood at $2.80 billion and those through ECBs at $1.74 billion.
The schemes for ECBs and OFCBs will remain open until December 31, 2026.
“Based on the encouraging response to the swap facility and the resultant forex inflows, it has been decided that the swap facility for FCNR-B deposits will be available only for deposits mobilised till August 31, 2026, but can be availed with RBI till September 11, 2026,” the central bank said on Friday.
FCNR (B) deposits are foreign currency deposits meant for NRIs. The interest earned on these deposits is tax-free in India. Banks are offering up to 7.5% interest on FCNR (B) deposits.
Meanwhile, strong inflows helped push India’s foreign exchange reserves to a four-month high of $707 billion in the week ended August 7. Reserves jumped $14.136 billion during the week, one of the largest weekly increases, marking the sixth consecutive week of accretion.
According to RBI’s weekly data, the overall forex reserves rose to $707.002 billion as of August 7. The reserves have increased by about $40 billion over the past six weeks.
The rise was led by a $9.946-billion increase in the central bank’s foreign currency assets, the largest component of reserves, partly aided by continuing inflows through the special dollar swap window.
Measures announced from June 8 to attract dollar inflows included discounted hedging facilities for overseas borrowings by state-run firms and banks, tax cuts on foreign investments in government bonds and a free-of-cost hedging facility for banks raising overseas forex deposits.
Between June 8 and August 14, the swap facilities attracted more than $56.85 billion, while foreign investors had net purchased government bonds worth over $2.5 billion as of July 31 under the Fully Accessible Route.
The overall reserves had risen by $10.512 billion to $692.866 billion in the week ended July 31.
Reserves had touched an all-time high of $728.494 billion in the week ended February 27 before the onset of the Iran war, after which the country faced significant exchange-rate pressures. Reserves subsequently fell to around $680 billion by May, when the rupee touched a low of 96.87 against the US dollar on May 20.
For the week ended August 7, foreign currency assets rose $9.946 billion to $574.625 billion, RBI data showed. Expressed in dollar terms, foreign currency assets also reflect the impact of appreciation or depreciation of non-US currencies such as the euro, pound and yen held in the reserves.
The value of gold reserves increased by $3.995 billion to $108.738 billion during the week. Special drawing rights rose by $79 million to $18.745 billion, while India’s reserve position with the IMF increased by $116 million to $4.894 billion, the RBI said.
