The Reserve Bank of India's special USD-INR Forex Swap facility has recorded an impressive $136.37 billion in foreign exchange inflows, significantly surpassing the government's and bankers' initial projections. Data released by the RBI confirms these steady capital inflows into the country by August 31, 2026, providing substantial comfort to the Indian rupee, which has faced recent pressures.
The Foreign Currency Non-Resident (Bank) or FCNR (B) deposits accounted for the largest share of these inflows, crossing the $100 billion mark to reach $127.2 billion. Other components included Overseas Foreign Currency Borrowings (OFCBs) contributing $5.26 billion and External Commercial Borrowings (ECBs) attracting $3.89 billion by the same date.
Initially, the scheme was expected to bring in $50-$60 billion, a figure later revised to $80 billion. The overwhelming response led the RBI to close the window for fresh FCNR (B) deposits a month earlier than planned, on August 31, 2026, instead of September 30. However, swaps under this facility remain available with the RBI until September 11, 2026, while the window for ECBs and OFCBs will stay open until December 31, 2026.
Why the RBI Introduced the Forex Swap Facility
The RBI introduced this special USD-INR forex swap facility on June 8, 2026, in response to economic challenges, including the ongoing West Asia conflict, a falling rupee, and rising prices of oil and energy imports. The primary goal was to bolster India's foreign exchange reserves and stabilize the economy.
Impact on India's Economy and Banks
The massive inflows have provided a significant boost to India's foreign reserves, which had been on a declining trajectory since February 2026. A report by Macquarie noted that the $100 billion mobilization from FCNR(B) deposits alone is large enough to reverse this trend and lift the headline reserve balance. This strengthening of external-sector cushion enhances the RBI's capacity to intervene in the foreign-exchange market, offering greater ammunition to stabilize the rupee.
Beyond national reserves, the strong inflows from FCNR(B) deposits have also aided deposit mobilization by banks, with bank deposits growing 14.7% year-on-year as of August 15, 2026. This is expected to support credit growth and improve the balance of payments. CareEdge Ratings highlighted that the strong mobilization has augmented banking system liquidity and provided banks with greater near-term funding flexibility.
Simply put, FCNR (B) deposits are a foreign currency fixed deposit that can be held by Non-Resident Indians, Overseas Citizens of India, and Persons of Indian Origin. The funds and interest earned are tax-free in India and are fully repatriable.
The success of the RBI forex scheme underscores its effectiveness in attracting capital and strengthening India's economic resilience amidst global uncertainties.