Foreign Banks Dominate FCNR(B) Inflows Under RBI’s Special Swap Scheme

Foreign banks have accounted for the majority of Foreign Currency Non-Resident (FCNR(B)) deposit inflows mobilised under the Reserve Bank of India’s (RBI) concessional swap facility, highlighting their strong overseas presence and ability to attract deposits from Non-Resident Indians (NRIs).

The special swap window, introduced by the RBI to encourage foreign currency inflows, has enabled banks to raise FCNR(B) deposits at competitive rates while accessing a concessional foreign exchange swap with the central bank. The initiative aims to strengthen India’s foreign exchange reserves and improve liquidity in the banking system.

Foreign Banks Lead Deposit Mobilisation

According to industry data, foreign banks have secured the largest share of FCNR(B) inflows under the scheme, leveraging their extensive international branch networks and relationships with NRI customers across key global markets.

Public and private sector banks have also participated in the scheme by offering attractive deposit rates to overseas Indians, but foreign lenders have emerged as the biggest contributors to the overall mobilisation.

RBI Facility Supports External Liquidity

The concessional swap facility was introduced to attract foreign currency deposits amid evolving global financial conditions and to bolster India’s external sector. The scheme enables banks to convert foreign currency deposits into rupees at favourable swap terms, reducing funding costs while supporting liquidity.

Analysts believe the strong response to the facility demonstrates continued confidence among NRIs in India’s banking system and is expected to strengthen foreign exchange reserves while providing banks with additional resources to support credit growth.

The RBI’s initiative is also expected to improve banks’ foreign currency funding profile and enhance resilience against external financial volatility, contributing to a stable outlook for India’s banking sector.