RBI Dollar-Rupee Swap Facility Draws Over 143 Billion Dollars in Inflows

What Happened

The Reserve Bank of India brought in 143.596 billion dollars through its special US dollar-rupee forex swap facility by September 18. Foreign Currency Non-Resident Bank deposits made up the biggest part of this amount at 132.98 billion dollars. Overseas Foreign Currency Borrowings brought in 5.32 billion dollars and External Commercial Borrowings added 5.296 billion dollars.

Background And Rules

The central bank started this facility on June 8 to bring more foreign money into the banking system, build up external buffers, and help domestic liquidity. Banks could collect fresh three-to-five-year FCNR deposits and swap the foreign money with the RBI at a special low rate to cut hedging costs. Non-resident Indians, Overseas Citizens of India, and Persons of Indian Origin can keep these deposits in approved foreign currencies like the US dollar, British pound, euro, Japanese yen, Australian dollar, and Canadian dollar.

Window Changes And Comparisons

The RBI closed the fresh FCNR deposit window on August 31, which was one month ahead of the original September 30 deadline, because of a very strong response. Swaps for deposits already collected could be done until September 11. The total money raised through FCNR deposits alone is much higher than the roughly 26 billion dollars collected during a similar 2013 scheme when the rupee faced heavy pressure. Meanwhile, the swap arrangements for eligible External Commercial Borrowings and Overseas Foreign Currency Borrowings stay open until December 31, 2026.