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Informist, Monday, Jun. 8, 2026

 

--RBI releases details of swap facility for ECBs by PSUs 

--RBI: Dlr-rupee swap facility for ECBs by PSUs for 3 yr, above maturity 

--RBI: Dlr-rupee swap facility available for ECBs by PSUs till Dec 31 

--RBI: PSU ECB dlr-rupee swap facility available in dollars only 

--RBI: PSU ECB dlr-rupee swap to be done at fixed rate of 1.5% per annum 

--RBI:Bks may exclude PSU ECBs swap positions from net-open position norms

 

NEW DELHI – To attract foreign capital inflows and strengthen the domestic currency, the Reserve Bank of India has introduced a dollar-rupee forex swap facility for external commercial borrowings and overseas foreign currency borrowings with a concessional forex swap facility for public sector undertakings. The swap will be undertaken at a fixed rate of 1.5% per annum, compounded semi-annually. Under the swap arrangement, banks can sell dollars to RBI and simultaneously agree to buy the same amount back at the end of the swap period, in multiples of $1 million.

 

The facility covers external commercial borrowings of three-year average maturity and above till Dec. 31, and overseas foreign currency borrowings raised by authorised dealer category-I banks for minimum three-year maturity. "The swap facility will be available to the PSU ECB borrowers through their authorised dealer category-I banks for eligible ECBs (external commercial borrowings) and eligible OFCBs (overseas foreign currency borrowings) raised by the authorised dealer category-I banks, raised in any currency," the RBI said. "However, the swap facility with RBI will be available in dollars only. The maximum tenor of swap will be coterminous with the repayment schedule or maturity of the ECB/ OFCB, subject to maximum period of five years."

 

"In the first leg of the transaction, the bank will sell dollars to RBI at the FBIL reference rate," the RBI said. "The settlement of the first leg of the swap will take place on a spot basis. In the reverse leg of the swap transaction, rupee funds will have to be returned to RBI along with the swap premium to obtain the dollars back." In the latest monetary policy, the RBI governor announced several measures to attract foreign capital inflows, as was widely expected. 

 

The swap facility comes into effect from the date of this circular and will remain open up to Jan. 15 for eligible external commercial borrowing drawdowns made and overseas foreign currency borrowings flows received up to Dec. 31.

 

The swap facility will run daily on all Mumbai working days except Saturdays and holidays. Each bank's weekly limit will be capped at the dollar equivalent of eligible external commercial borrowings and overseas foreign currency borrowings inflows raised during the preceding week or weeks. 

 

The central bank also said that banks availing the facility must furnish a declaration, duly signed by authorised signatories, confirming they have facilitated hedging of eligible external commercial borrowings and received eligible overseas foreign currency borrowings flows during the preceding week or weeks. "The swap facility will be operationalised by the financial markets operations department of RBI at Mumbai, who will announce a schedule for banks to avail the facility, in an orderly manner keeping in view the market conditions and other relevant factors," the RBI said. 

 

Eligible banks can approach RBI's Financial Markets Operations Department by email with their request for the dollar swap facility, indicating the amount of dollars to be swapped and the tenor of the swap, along with the declaration. Also, banks are not required to enter into any international swaps and derivatives association agreement with RBI to avail the facility.

 

In another circular, the RBI said authorised dealer category-I banks may exclude the swap positions arising out of Foreign Currency Non-Resident (Bank) deposits, external commercial borrowings and overseas foreign currency borrowings while ensuring compliance with norms related to rupee net open positions.  End

 

US$1 = INR 95.71

 

Reported by Vaishali Tyagi

Edited by Avishek Dutta

 

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