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The Reserve Bank of India’s concessional swap scheme could attract foreign exchange inflows worth $80-85 billion, according to a report by SBI Research. The estimate is significantly higher than earlier projections and reflects strong participation from banks and non-resident Indians (NRIs) through Foreign Currency Non-Resident (Bank), or FCNR(B) deposits.
SBI Research now expects FCNR(B) deposits alone to reach $65-70 billion by the end of the scheme, revising its earlier estimate of $40-45 billion. The report said the pace of fund mobilization has exceeded expectations, with banks already raising more money in just 45 days than they did during a similar RBI initiative in 2013.
The report noted that public sector banks have played the biggest role in attracting deposits under the RBI’s scheme.
According to RBI data, FCNR(B) deposits had reached $17.41 billion as of July 17. Total inflows under the special swap window stood at $20.72 billion, including $1.97 billion through Overseas Foreign Currency Borrowings (OFCBs) and $1.34 billion via External Commercial Borrowings (ECBs).
SBI Research estimated that FCNR(B) deposits may have climbed further to around $26-28 billion by July 23, indicating sustained momentum in foreign currency mobilization.
The report also expects a large share of FCNR deposits maturing in August and September 2026 to be renewed under the new swap facility. Higher interest rates offered under the scheme are likely to encourage depositors to roll over their investments, further boosting inflows.
The RBI introduced the concessional swap facility in June as part of a broader strategy to strengthen India’s balance of payments and improve foreign exchange liquidity. Under the mechanism, banks can raise foreign currency through FCNR(B) deposits, overseas borrowings and external commercial borrowings, while accessing a concessional swap facility with the central bank.
If the current trend continues, the inflows could provide a significant boost to India’s foreign exchange reserves and strengthen the country’s external position. Economists believe the scheme will also give the RBI greater flexibility in managing rupee volatility while improving confidence in India’s balance of payments.
