India Revives FCNR(B) Concessional Swap Window to Attract Foreign Currency Deposits

The Reserve Bank of India (RBI) has revived the Foreign Currency Non-Resident (Bank) [FCNR(B)] concessional swap window until September 30, 2026 to attract foreign currency deposits from Indian diaspora. This move aims to strengthen India's foreign exchange reserves and stabilise the rupee amid volatile global financial conditions.

The RBI offers banks a concessional foreign exchange swap facility for FCNR(B) deposits with 3-5 year maturities, which benefits banks by lowering their hedging costs by around 3% compared to prevailing FX swap rates. Banks can offer attractive returns to non-resident Indians (NRIs), such as large banks at 6%, and smaller/private banks up to 7.1%. These rates exceed those on relatively risk-free US Treasury securities, making FCNR(B) deposits more attractive.

The RBI aims to mobilise USD 50-70 billion through this scheme. As of now, total foreign currency mobilisation has reached USD 20.72 billion, with USD 17.4 billion (84%) coming through FCNR(B) deposits alone. This demonstrates India's ability to leverage its large global diaspora as a strategic source of foreign currency.