Banks can now raise eligible FCNR(B) deposits only until August 31, a month earlier than the original deadline.
Banks can now raise eligible FCNR(B) deposits only until August 31, a month earlier than the original deadline.
The Reserve Bank of India (RBI) has brought forward the deadline for Indian banks to mobilise foreign currency deposits from non-resident Indians after the special facility attracted $56.846 billion in foreign currency inflows.
Under the revised timeline, banks can raise Foreign Currency Non-Resident (Bank), or FCNR(B), deposits through the RBI’s special foreign exchange swap facility until August 31, 2026, instead of the earlier deadline of September 30.
Banks will, however, have until September 11 to enter into dollar-rupee swaps with the RBI against eligible FCNR(B) deposits.
FCNR(B) deposits lead inflows
The RBI introduced the special swap facility on June 8 to encourage foreign currency inflows through FCNR(B) deposits, Overseas Foreign Currency Borrowings (OFCBs) and External Commercial Borrowings (ECBs).
As of August 13, total inflows through the three channels had reached $56.846 billion, according to RBI data.
FCNR(B) deposits accounted for the largest share at $52.3 billion. OFCBs contributed $2.805 billion, while ECBs brought in another $1.741 billion.
The strong response prompted the central bank to close the FCNR(B) mobilisation window earlier than initially planned.
Swap facility continues beyond August 31
The revised deadline does not mean banks must complete all related transactions by August 31.
The RBI will continue to allow dollar-rupee swaps against eligible FCNR(B) deposits until September 11, giving banks additional time to complete transactions after the deposit mobilisation window closes.
The central bank said the decision reflected the “encouraging response” to the facility and the significant foreign currency inflows generated through it.
ECB and OFCB deadlines remain unchanged
The RBI’s latest decision applies only to FCNR(B) deposits.
Banks can continue to mobilise funds through ECBs and OFCBs until December 31, 2026, under the existing framework.
The central bank had initially allowed authorised dealer banks to conduct dollar-rupee swaps against eligible inflows through October 16. The latest revision therefore brings forward the FCNR(B) deposit mobilisation deadline while leaving the timelines for the other two channels unchanged.
The move highlights strong demand for the RBI’s foreign currency deposit facility, with FCNR(B) deposits accounting for more than 90% of total inflows under the special scheme.
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Source: Gulf News
