The Reserve Bank of India will close its special FCNR(B) deposit scheme on Aug 31 — a month ahead of schedule — after banks raised $52.3 billion in deposits by Aug 13, according to Business Today. The central bank's decision follows a strong response to the facility, which was designed to bring foreign currency into India's banking system at a time when dollar liquidity was a concern.
Scheme Structure and Inflows
Business Today reported that the RBI introduced the special USD-INR forex swap facility on June 8, 2026, covering FCNR(B) deposits, overseas foreign currency borrowings (OFCBs) and external commercial borrowings (ECBs). By Aug 13, banks had reported total inflows of $56.9 billion under the three components. FCNR(B) deposits accounted for $52.3 billion, while OFCBs and ECBs brought in $2.8 billion and $1.7 billion, respectively.
| Component | Inflows by Aug 13 |
|---|---|
| FCNR(B) deposits | $52.3 billion |
| OFCBs | $2.8 billion |
| ECBs | $1.7 billion |
| Total | $56.9 billion |
Banks can swap the dollars raised with the RBI until Sept 11, according to Business Today. The facilities for ECBs and OFCBs will continue until Dec 31, as originally planned, leaving FCNR(B) as the only component closing early.
How the Swap Works
At the heart of the arrangement is RBI's swap. Banks bring in dollars and RBI provides rupees in exchange.
When the swap matures, the transaction is reversed, with the bank returning the rupees and receiving its dollars back. In economic terms, the RBI absorbs much of the currency risk for the duration of the deposit, making the arrangement a form of state-provided currency insurance, the report noted. Because the RBI carries that risk, participating banks have a defined USD-INR exchange arrangement for the life of the deposit.
SBI's Mobilisation
CS Setty, chairman of State Bank of India (SBI), said during an analysts' meet that SBI had mobilised almost $6 billion of FCNR(B) deposits, alongside about $1 billion of OFCBs and $300 million of ECBs. That put total funding raised through the programme at roughly $7.3 billion, most of it through the bank's foreign offices, according to Business Today.
Setty had earlier indicated that SBI could raise around $10 billion under the scheme. According to Business Today, the proceeds would be used to retire bulk deposits of up to Rs 1 lakh crore.
Why the Early Closure
Under the scheme, foreign banks have in many cases extended financing many times the amount of the initial deposit made by wealthy customers, Business Today reported. Bankers said the challenges in deploying the proceeds in fixed-return long-term assets might have prompted the early closure.
The $52.3 billion FCNR(B) total represents the bulk of the $56.9 billion raised across all three components. For corporate treasurers and trade finance desks, the early closure compresses the window for FCNR(B)-backed swaps to Sept 11, while the ECB and OFCB swap facilities remain accessible until Dec 31. The structure's defining feature — RBI's absorption of currency risk for the deposit's duration — remains in place for swaps executed before the respective deadlines.
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