Indian Rupee coin on top of dollar bills for financial and investment concepts
The RBI on Monday disclosed forex inflow numbers, including via Foreign Currency Non-Resident (Bank)/ FCNR (B) deposits, setting at rest speculation about slow accretion to these deposits under its limited period concessional swap facility.In the 39 day period beginning June 8th and up to July 17th, overall forex inflows were robust at $20.718 billion, with fresh FCNR (B) accretion accounting for 84 per cent (or $17.406 billion) of the total inflows.Inflows due to overseas foreign currency borrowings (OFCBs) by banks and external commercial borrowings (ECBs) by public sector undertakings were at $1.97 billion and $1.342 billion, respectively.Banks swapped inflows aggregating $17.406 billion from fresh FCNR (B) deposits of 3-5 years duration with RBI, which is bearing the full hedging cost. They can avail of this buy-sell swap facility till September-end 2026.Among Banks, State Bank of India and Punjab National Bank have reportedly said to have seen fresh inflows of about $1.90 billion and $425 million via fresh FCNR (B) deposits in June.Leveraging NRIBanks are raising funds via the OFCB route in order to provide leverage to their Non-Resident Indian (NRI) customers, who, in turn, can place proceeds of the leverage as FCNR (B) deposits with them. concessional swaps for OFCB and ECB inflows are available till December 31, 2026The swap facility has seen avid interest and attracted steady forex inflows since June 8, 2026, RBI said. In a buy/sell swap, the central bank buys Dollars from banks in exchange for Rupees and simultaneously agrees to sell the Dollars back at a later dater. The first leg of the swap bolsters the RBI’s Dollar liquidity, giving it the wherewithal to intervene in the forex market and smoothen volatility in the Rupee.Madan Sabnavis, Chief Economist, Bank of Baroda, said: “The forex inflow numbers via FCNR (B) deposits are very encouraging. Frankly, I would have expected a much lower figure. The official target is around US$40-50 billion, and mobilising US$17.4 billion in such a short period is a very good start. Traditionally, these schemes tend to see inflows towards the closing months, but this time the response appears to be front-loaded.”Sabnavis noted that the impact of these inflows is not yet visible on liquidity and foreign exchange reserves. There seems to be a timing difference in the way the funds are moving through the system, he added.“I believe a substantial portion of these deposits is likely to be leveraged. Individual NRIs typically invest relatively small amounts—usually in thousands of dollars, not millions. To generate inflows of this magnitude within such a short period, leverage must have played an important role,” Sabnavis said.Arvind K, Head – Treasury, Tamilnad Mercantile Bank, observed that the forex inflows via FCNR (B) are encouraging and the reported numbers are likely to include both leveraged and non-leveraged transactions.Additional mobilisation“There are still around two months left under the scheme, so there is scope for additional mobilisation. The initial surge has been driven by early enthusiasm.“Going forward, incremental inflows will increasingly depend on leveraged structures rather than straightforward deposits. Much will depend on whether Indian banks still have borrowing limits available and whether overseas banks are willing to provide leverage against Standby Letters of Credit (SBLCs) issued by Indian banks.” he said.Published on July 20, 2026
