RBI Introduces Forex Swap Window For Fresh FCNR (B) Deposits

The Reserve Bank of India (RBI) has introduced a dollar-rupee forex swap facility for fresh Foreign Currency Non-Resident (Bank), or FCNR (B), deposits mobilised by banks for a period of three to five years. The facility comes into effect immediately and will remain available until October 16, 2026, for eligible deposits raised between June 8 and September 30, 2026.

FCNR (B) deposits are foreign currency term deposits maintained by non-resident Indians (NRIs). Under the new arrangement, authorised dealer (AD) category-I banks can access the swap facility for fresh FCNR (B) deposits raised in any freely convertible currency. However, the swap transaction with RBI will be available only in dollars.

How the Swap Facility will Work

Under the arrangement, banks can sell dollars to RBI in multiples of $1 million and simultaneously agree to buy back the same amount at the end of the swap period. The swap tenure will match the maturity of the underlying deposit.

The first leg of the transaction will be settled at the Financial Benchmarks India (FBIL) reference rate on a spot basis, while the second leg of the swap will be executed at the same exchange rate, with the swap being undertaken at par. 

Banks mobilising FCNR (B) deposits in currencies other than the dollars can convert the amount into equivalent dollars at prevailing market rates to determine the amount eligible for the swap facility.

Conditions for Banks

RBI has said that banks will be free to price these deposits according to their internal policies, subject to the existing regulatory ceilings. They will also be required to maintain separate records and audit trails for deposits covered under the scheme. 

A bank can avail of the facility only once a week. The maximum amount eligible for swapping in a week will be linked to the volume of eligible FCNR (B) deposits mobilised during the preceding weeks for which the facility has not already been used.

The central bank has also introduced a one-year lock-in period for the underlying deposits. Banks may permit premature withdrawal after one year according to their internal policies. However, swaps undertaken with RBI cannot be cancelled.

The RBI has said that the deposits mobilised under the scheme will continue to be governed by existing FCNR (B) deposit regulations, subject to specific relaxations provided under the swap facility framework.