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Informist, Monday, Jun. 8, 2026

 

NEW DELHI – The Reserve Bank of India Monday issued details of its US dollar-rupee swap facility for fresh Foreign Currency Non-Resident (Bank) deposits, mobilised for a minimum tenor of three years and maximum tenor of five years. The central bank allowed banks to price these deposits as per their internal policy, but within the overall ceiling, as per the extant guidelines issued by the RBI. 

 

The RBI's window for banks to raise FCNR deposits, a tool last deployed in 2013, is expected to draw signficant inflows of around $30-$40 billion, as per market participants. The swap facility will be available to banks for mobilising FCNR(B) deposits in any freely convertible currency, including deposits that are renewed upon maturity, while the swap facility with the RBI will be available in US dollars only, it said. RBI Governor Sanjay Malhotra had announced the swap facility on Friday while announcing the monetary policy decision. 

 

The central bank advised banks to maintain separate records for FCNR(B) deposits that are covered under this scheme along with proper audit trail of transactions, adding that the tenor of the swap will be in alignment with the tenor of the underlying deposits. 

 

Market participants said the notification suggests banks may be able to offer leverage to depositors investing in FCNR(B) deposits under the swap facility. The scale of inflows from the scheme will depend heavily on regulatory clarity around leverage for depositors, they added. 

The RBI said FCNR(B) deposits mobilised during the swap facility period will continue to be governed by existing guidelines. However, it added that provisions under Paragraph 402 of the RBI (Commercial Banks – Credit Facilities) Directions, 2025 would not apply to such deposits. Under paragraph 402, a bank is not allowed to issue a non-fund-based facility to any entity assuring redemption or repayment of funds raised by any entity via deposits, issuance of bonds, or in any other form. This is not applicable under the current scheme, the RBI said.

 

The RBI also said in a separate circular that banks can exclude the swap positions arising out of FCNR(B) deposits while ensuring compliance with the RBI's provisions for net open rupee positions. On Mar. 27, the central bank directed banks to ensure that net open rupee positions in the onshore market do not exceed $100 ‌million at the end of each business day. 

 

Further, for FCNR(B) deposits mobilised in permissible foreign currencies other than US Dollar, banks can arrive at the equivalent US Dollar amount eligible to be swapped by converting the same at the prevailing market rates on the day of the swap deal, the RBI said. "Banks may follow a consistent policy as far as conversion is concerned and should maintain a proper documentation (audit trails) of the procedure followed for such conversions," it added. 

 

The swap facility will be operated daily on all working days in Mumbai, except Saturdays and holidays. However, a bank can avail of the swap facility only once in a week. "During any week, the maximum amount of US Dollars that a bank would be eligible to swap with RBI would be equal to all eligible FCNR(B) deposits mobilised in equivalent US Dollar terms during the preceding week(s) for which the facility has not been availed earlier," RBI said.

 

Further, under the swap facility, a bank can sell US dollars in multiples of $1 million to RBI and simultaneously agree to buy the same amount of US dollars at the end of the swap period. In the first leg of the transaction, the bank will sell US dollars to RBI at Financial Benchmarks India Private Ltd. reference rate. The settlement of the first leg of the swap will take place on spot basis from the date of transaction. The second leg of the swap will take place at the same rate as the first leg. The swap will be undertaken on a par, RBI said.

 

The central bank said that the underlying FCNR(B) deposits will have a lock-in period of one year and the banks may at their discretion allow premature withdrawal of such deposits after one year, as per their internal policy. However, swaps undertaken with the RBI cannot be cancelled.

 

The swap facility comes into effect immediately and will remain open up to Oct. 16 for deposits mobilised between Jun. 8 and Sept. 30. End

 

US$1 = INR 95.71

 

Reported by Pratiksha

Edited by Deepshikha Bhardwaj

 

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