The early closure of the FCNR(B) window reflects what the RBI has described as an encouraging response. Banks have actively sought to attract overseas deposits, with some offering more competitive interest rates to bring in foreign currency
Indian banks have attracted a substantial flow of foreign currency into the country, with authorised dealer banks raising $72.848 billion in forex inflows by August 21, according to the Reserve Bank of India.
A significant share of the mobilisation has come through Foreign Currency Non-Resident (Bank) or FCNR(B) deposits. These deposits accounted for $65.397 billion of the total inflows, highlighting strong overseas interest in India’s dollar-denominated deposit instruments.
A further $7.451 billion was raised through External Commercial Borrowings and Overseas Foreign Currency Borrowings under the RBI’s special swap facility.
The central bank introduced the USD-INR foreign exchange swap facility on June 8, 2026, covering FCNR(B) deposits, ECBs and OFCBs. The scheme was designed to encourage foreign currency inflows at a time when pressure on the Indian rupee had increased.
The RBI has since brought forward the closing date for the FCNR(B) component. According to the central bank, the window will remain open until August 31, while the facility for ECBs and OFCBs will continue until December 31.
The early closure of the FCNR(B) window reflects what the RBI has described as an encouraging response. Banks have actively sought to attract overseas deposits, with some offering more competitive interest rates to bring in foreign currency.
The move is significant because FCNR(B) deposits allow eligible non-resident customers to hold foreign currency deposits in Indian banks without taking direct exposure to fluctuations in the rupee during the deposit period.
The latest inflows also come against a backdrop of strengthening foreign exchange reserves. RBI data showed India’s reserves increased by $9.905 billion to $716.90 billion in the week ended August 14.
The rise followed an even larger increase of $14.1 billion in the previous week, when reserves reached around $707 billion. The latest figures represent the highest reserve level recorded during the current financial year.
The increase in reserves has been partly supported by foreign currency inflows associated with the FCNR(B) scheme. Such inflows can strengthen India’s external liquidity position and provide an additional buffer against volatility in global currency markets.
An SBI Research report suggested that the RBI may already have achieved its broader dollar mobilisation objective. The report estimated that inflows could potentially reach around $85 billion if another $25 billion to $30 billion entered the country before the end of August.
The report also argued that the cost of the swap facility was unlikely to have been the main reason for shortening the window. It estimated the cumulative cost at about 15 per cent of the corpus, or approximately $10.5 billion, while noting that this figure should be considered alongside the scale of India’s overall foreign exchange reserves.
The latest data therefore point to a substantial response to the RBI’s attempt to draw foreign currency into the banking system. For India, the combination of strong FCNR(B) inflows and rising reserves provides greater external financial resilience at a time when global currency and capital markets remain uncertain.
With the FCNR(B) window closing on August 31, attention will now turn to the final mobilisation figures and how the inflows affect India’s reserves, banking liquidity and currency stability in the months ahead.
