Collections Under RBI Dollar Swap Scheme Cross $72.8 Billion
Commercial banks in India have mobilised 72.8 billion dollars in foreign-currency inflows under the Reserve Bank of India’s (RBI) special swap facility as of August 21, according to central bank data released on Saturday. The substantial mop-up was primarily driven by foreign currency non-resident (bank), or FCNR(B), deposits.
What Happened
Data from the RBI shows that foreign-currency collections through the special window accelerated significantly through August. Of the cumulative 72.8 billion dollars gathered by August 21, FCNR(B) deposits constituted the largest share at 65.4 billion dollars. Overseas foreign currency borrowings (OFCBs) contributed 4.9 billion dollars, while external commercial borrowings (ECBs) brought in 2.6 billion dollars.
Total inflows through the facility expanded rapidly from 40.8 billion dollars on July 31 to 56.9 billion dollars on August 13, before reaching 72.8 billion dollars on August 21. This reflects an addition of 32 billion dollars in three weeks, taking cumulative inflows to roughly 1.8 times the level recorded at the end of July. In response to what the RBI described as an encouraging response and heavy inflows, the central bank advanced the closure date for FCNR(B) deposit mobilisation from September 30 to August 31.
Key Highlights
- Total Collections: Banks garnered 72.8 billion dollars under the facility by August 21, comprising 65.4 billion dollars in FCNR(B) deposits, 4.9 billion dollars in OFCBs, and 2.6 billion dollars in ECBs.
- Rapid Inflow Growth: Inflows expanded by 32 billion dollars across three weeks in August, with weekly FCNR(B) additions of 15.6 billion dollars and 13.1 billion dollars in the last two reporting periods.
- Leading Lenders: HSBC, State Bank of India (SBI), ICICI Bank, and HDFC Bank emerged as top mobilisers. Bank-wise data from June 5 to July 30 showed HSBC mobilising 6 billion dollars, SBI 4 billion dollars, ICICI Bank 3.7 billion dollars, Kotak Mahindra Bank 1.7 billion dollars, Axis Bank 1.6 billion dollars, and HDFC Bank 1.4 billion dollars.
- Window Revision: Originally set to run until September 30, the mobilisation deadline for FCNR(B) deposits was brought forward to August 31, while corresponding swaps with the RBI can be conducted until September 11. The ECB and OFCB windows remain open until December 31.
- Regulatory Relief: The scheme allows fresh FCNR(B) deposits with tenors between three and five years to qualify for concessional USD-INR swaps, along with regulatory exemptions on Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) requirements.
Why This Matters
The facility enables banks to acquire foreign-currency funding while shifting currency-risk management to the central bank. The strong inflows have directly supported national reserves, helping foreign exchange reserves expand by nearly 10 billion dollars during the week ended August 15. According to bankers, these inflows are expected to lift reserves beyond an all-time peak of 728 billion dollars by the end of August.
What to Watch Next
The window for mobilising qualifying FCNR(B) deposits closes on August 31, with banks having until September 11 to complete the related swap arrangements with the central bank. Borrowings under the ECB and OFCB components will remain operational through December 31.
Frequently Asked Questions
What is driving the majority of the inflows under the swap window?
FCNR(B) deposits form the dominant share, delivering 65.4 billion dollars out of the total 72.8 billion dollars mobilised as of August 21.
Why was the FCNR(B) mobilisation window shortened?
The RBI decided to advance the deadline to August 31 following what it termed an encouraging response and substantial foreign exchange inflows.
Which financial institutions led the mobilisation efforts?
HSBC, SBI, ICICI Bank, and HDFC Bank were among the leading institutions tapping nonresident networks, whereas public sector lenders other than SBI scaled up at a slower pace.
Source: Times of India