RBI advances FCNR(B) swap window closure to August 31

The Reserve Bank of India today said it will close the mobilisation window for FCNR(B) deposits nearly a month ahead of schedule, citing the encouraging response to its concessional forex swap facility and the resultant surge in foreign currency inflows.

The FCNR(B) deposit window, which was originally scheduled to remain open until September 30, will now be available only for deposits mobilised up to August 31, 2026. However, banks can avail the associated swaps with the RBI until September 11.

The decision comes after foreign currency inflows under the three swap-linked facilities reached $56.85 billion as of August 13, with FCNR(B) deposits accounting for the overwhelming share at $52.30 billion. Overseas Foreign Currency Borrowings contributed $2.81 billion, while External Commercial Borrowings brought in another $1.74 billion.

The early closure marks a sharp shift from the RBI's position last week. Governor Sanjay Malhotra had said on August 5 that there was no proposal under consideration to prematurely close the FCNR(B) scheme, while noting that the central bank hoped to receive healthy inflows going forward.

"We have got robust flows. We do hope to get healthy flows going forward. But there is no proposal under consideration to close the scheme prematurely," Malhotra had said at the post-MPC press conference. He had also said the RBI did not have any mobilisation target under the scheme.

The latest move suggests the response has now been strong enough for the RBI to bring forward the mobilisation cut-off, while retaining some time for banks to complete the swap process.

Importantly, the RBI has not shortened the windows for ECBs and OFCBs. The swap scheme for both categories will continue to remain open until December 31, 2026, as originally scheduled.

The $52.30 billion FCNR(B) inflow is also substantially above the initial market expectations around the facility, highlighting the strong response from banks and overseas depositors to the concessional swap terms.