RBI Forex Swap Facility Attracts $73 Billion Inflows As FCNR(B) Deposits Drive Response

The Reserve Bank of India's foreign exchange swap facility, launched on June 8, has attracted $73 billion in foreign exchange inflows over nearly 11 weeks. FCNR(B) deposits account for $65.4 billion of this amount, according to the finance ministry. The facility, which also includes foreign currency non-resident (bank) borrowings (OFCBs) and external commercial borrowings (ECBs), saw a high response from non-resident Indians, prompting the RBI to shorten the FCNR(B) window to 31 August from the originally planned 30 September.

FCNR(B) deposits are term deposits held by non-resident Indians in authorized banks in permitted foreign currencies, with maturities ranging from one to five years. The strong response reflects confidence in India's banking system and economy among the Indian diaspora, and is expected to bolster the country's external-sector resilience by increasing foreign-currency resources available to the banking system.