Banks in India have mobilised a massive $72.85 billion in foreign currency under the Reserve Bank of India’s special forex facility.
A major portion of this money has come through FCNR(B) deposits, which accounted for nearly 90% of the total amount mobilised.
According to RBI data, banks raised $65.397 billion through FCNR(B) deposits.
The figures highlight the important role of non-resident deposits in bringing foreign currency into India’s financial system.
FCNR(B) Deposits Lead Foreign Currency Mobilisation
Apart from FCNR(B) deposits, banks also raised foreign currency through other routes.
The breakup is:
FCNR(B) deposits: $65.397 billion
Overseas Foreign Currency Borrowings (OFCBs): $4.86 billion
External Commercial Borrowings (ECBs): $2.591 billion
Together, these sources helped banks mobilise $72.85 billion under the special arrangement.
The facility is particularly important at a time when the rupee and global currency markets remain sensitive to external economic pressures.
What Are FCNR(B) Deposits?
FCNR(B) stands for Foreign Currency Non-Resident (Bank) account.
These are term deposits that NRIs can maintain with Indian banks in permitted foreign currencies instead of Indian rupees.
One of the main features of these deposits is that they remain denominated in the foreign currency.
Therefore, depositors are not exposed to the same exchange-rate risk that they would face with a normal rupee-denominated deposit.
For Indian banks, FCNR(B) deposits are an important source of foreign currency funding.
How Does the RBI’s Dollar-Rupee Swap Facility Work?
The process is relatively simple.
First, banks mobilise foreign currency through eligible sources such as FCNR(B) deposits.
They can then use the RBI’s special swap facility to exchange the foreign currency for rupees.
In return, banks receive rupee liquidity, while the RBI gets the foreign currency.
This mechanism helps improve the availability of foreign currency in India’s financial system without depending entirely on traditional intervention in the spot foreign exchange market.
The facility is part of the RBI’s broader efforts to improve foreign currency liquidity and support financial stability during periods of pressure on the rupee and global financial markets.
FCNR(B) Window Closes on August 31
The RBI’s special forex facility includes three routes: FCNR(B) deposits, ECBs and OFCBs.
However, their deadlines are different.
The special FCNR(B) window will close on August 31, 2026.
The facilities for external commercial borrowings and overseas foreign currency borrowings will remain available until December 31, 2026.
This gives banks only a short window to mobilise additional FCNR(B) deposits under the special arrangement.
Why Is This Important?
The $72.85 billion mobilisation shows how significant foreign currency deposits and borrowings can be for India’s financial system.
With FCNR(B) deposits making up the largest share, the facility has provided banks with an additional source of foreign currency while helping improve rupee liquidity.
