Banks have mobilised over 20.7 billion US Dollars (USD) in foreign exchange inflows under the Reserve Bank of India’s (RBI) special swap scheme till Friday last week, according to RBI data issued yesterday. The scheme, announced to strengthen India’s balance of payments and incentivise capital inflows, was operationalised on 8 June 2026. The inflows provide much-needed liquidity to the foreign exchange market, directly impacting trade finance costs and availability for importers and exporters.
Breakdown of Inflows Under the Swap Scheme
According to the RBI data, of the total deposits, banks received over 17.4 billion USD through Foreign Currency Non-Resident (Bank) [FCNR(B)] deposits. Nearly two billion USD were raised through Overseas Foreign Currency Borrowings (OFCBs), and over 1.3 billion USD through External Commercial Borrowings (ECBs).
| Instrument | Amount (USD) |
|---|---|
| FCNR(B) deposits | $17.4 billion |
| Overseas Foreign Currency Borrowings (OFCBs) | $2 billion |
| External Commercial Borrowings (ECBs) | $1.3 billion |
| Total | $20.7 billion |
Timeline and Availability
The concessional swap facility for FCNR(B) deposits will remain available until 30 September 2026, while the facility for OFCBs and ECBs will continue until 31 December 2026. This extended timeline allows banks to continue sourcing foreign currency funds at favourable swap rates, supporting the rupee and improving the country's foreign exchange reserves.
Implications for Trade Finance
The large forex inflow under the swap scheme provides banks with additional foreign currency liquidity, which can be deployed for trade finance activities such as issuing Letters of Credit (LCs), providing pre-shipment and post-shipment financing, and funding import bills. For corporate treasurers and CFOs involved in international trade, the increased availability of USD in the banking system can lead to tighter bid-offer spreads on forex transactions and lower hedging costs. Importers, in particular, may benefit from more competitive pricing on forward covers and swaps.
Exporters, on the other hand, may find that banks are more willing to discount export bills or offer pre-shipment credit in foreign currency at improved rates. The scheme also reduces the pressure on the rupee, indirectly benefiting trade finance through lower currency volatility.
Impact on Importers and Exporters
For importers who rely on foreign currency loans or letters of credit, the inflow of FCNR(B) deposits and ECBs provides banks with a stable source of long-term foreign currency funding. This can translate into better terms for import financing, including lower interest rates on buyers’ credit. Exporters using factoring or forfaiting facilities may similarly see improved pricing as banks are flush with funds.
The scheme also supports the overall balance of payments, which is a key indicator for rating agencies and trade credit insurers. A stronger external position reduces the risk of sovereign downgrades and can lower the cost of trade credit insurance and export credit agency guarantees.
Conclusion
The RBI’s special swap scheme has succeeded in attracting significant forex inflows, with over $20.7 billion mobilised in just over a month. Trade finance professionals should monitor the continued availability of the facility through September and December 2026, as it may influence the cost and availability of foreign currency funding for cross-border transactions.
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