RBI's Forex Swap Scheme Mobilizes Over $40 Billion, Doubling in a Fortnight
UPSC / SSC current affairs note · Economy
Why in news
The Reserve Bank of India (RBI) announced that its concessional dollar swap facility has mobilized over $40 billion in foreign exchange, more than doubling in just a fortnight. This rapid mobilization surpasses the previous FCNR(B) deposit drive of 2013, highlighting the scheme's success in boosting forex reserves amid global challenges.
Background
The RBI introduced the concessional dollar swap facility to encourage banks to bring in foreign currency deposits and borrowings, thereby strengthening India's foreign exchange reserves. A similar scheme was used in 2013 to stabilize the rupee during taper tantrum volatility.
Key facts
Total forex mobilization under RBI's concessional dollar swap facility crossed $40 billion as of July 31, 2026.
The amount more than doubled from $17.4 billion raised in the first 42 days after the scheme started on June 8, 2026.
FCNR(B) deposits accounted for $36.7 billion, overseas foreign currency borrowings (OFCBs) $2.6 billion, and external commercial borrowings (ECBs) $1.5 billion.
FCNR(B) deposits alone exceeded the ~$26 billion mobilized under the 2013 special scheme in just over seven weeks.
The inflows occurred despite higher US Treasury yields and tax-related issues affecting NRI investments.
The facility remains available until September 30, 2026, for FCNR(B) deposits and until December 31, 2026, for OFCBs and ECBs.
The scheme allows banks to swap fresh FCNR(B) deposits, OFCBs, and ECB inflows with RBI at a preferential rate.
Prelims pointers
- RBI's concessional dollar swap facility
- FCNR(B) deposits
- Overseas Foreign Currency Borrowings (OFCBs)
- External Commercial Borrowings (ECBs)
- Foreign exchange reserves
- RBI's role in forex management
- 2013 special FCNR(B) scheme
Mains angles
- Discuss the significance of RBI's swap facility in managing forex reserves and exchange rate stability.
- Examine the impact of global factors like US Treasury yields on NRI deposit inflows.
- Critically analyze the effectiveness of such schemes compared to other measures to attract foreign capital.