RBI Launches USD-INR Forex Swap Facility for FCNR(B) Deposits

The Reserve Bank of India (RBI) has introduced a US Dollar–Rupee Forex Swap Facility for eligible Foreign Currency Non-Resident (Bank) [FCNR(B)] deposits to encourage foreign currency inflows and support mobilisation of NRI deposits.

The facility is available for fresh FCNR(B) deposits, including eligible renewals, raised during the specified period and in accordance with the prescribed scheme guidelines.

1. Eligible FCNR(B) Deposits Covered

The swap facility shall be available for:

• Fresh FCNR(B) deposits mobilised in any freely convertible currency; and
• FCNR(B) deposits renewed upon maturity.

The eligible deposits must have a tenor of:

• Minimum 3 years; and
• Maximum 5 years.

2. Swap Facility Available Only in US Dollars

Although FCNR(B) deposits may be mobilised in any freely convertible foreign currency, the swap arrangement with the RBI will be available only in US Dollars.

Banks seeking to avail the facility must therefore undertake the swap transaction in USD irrespective of the currency in which the deposit was originally mobilised.

3. Swap Tenor Linked to Deposit Tenor

The tenure of the swap transaction will align with that of the underlying FCNR(B) deposit.

Accordingly, the maturity of the swap contract and the corresponding deposit will run concurrently.

4. Operational Framework of the Facility

The facility will be operated:

• Daily on all working days in Mumbai;
• Excluding Saturdays and public holidays.

However, each participating bank may avail itself of the swap facility:

• Only once a week.

5. Mechanism of the Swap Transaction

Under the swap arrangement:

• A bank may sell US Dollars to the RBI in multiples of USD 1 million; and
• Simultaneously, agree to purchase the same amount of US Dollars from the RBI at the end of the swap period.

This structure enables banks to manage foreign exchange exposure arising from FCNR(B) deposits while obtaining rupee liquidity.

6. Compliance Requirement for Participating Banks

Banks seeking to avail the facility must submit a declaration to the RBI.

The declaration must:

• Be duly signed by authorised signatories of the bank; and
• Confirm that the FCNR(B) deposits have been mobilised in accordance with the prescribed scheme guidelines.

This requirement is intended to ensure compliance with the conditions governing the facility.

7. What Are FCNR(B) Deposits?

Foreign Currency Non-Resident (Bank) [FCNR(B)] deposits are term deposits maintained by Non-Resident Indians (NRIs) in designated foreign currencies.

These deposits allow NRIs to hold funds in foreign currency without exposure to exchange rate fluctuations on the principal amount during the deposit tenure.

8. Objective of the Facility

The US Dollar–Rupee Forex Swap Facility is intended to:

• Encourage mobilisation of FCNR(B) deposits;
• Attract additional foreign currency inflows;
• Provide banks with an efficient hedging mechanism;
• Support foreign exchange liquidity; and
• Strengthen India’s external sector position.

The measure complements the RBI’s relaxation of CRR and SLR requirements on eligible FCNR(B) deposits and forms part of a broader strategy to enhance foreign exchange inflows and financial stability.