Foreign banks accounted for a significant portion of the inflows into Foreign Currency Non-Resident (FCNR(B)) deposits under the Reserve Bank of India's (RBI) concessional swap facility. According to RBI data, total FCNR(B) deposits reached approximately $17.4 billion, while Overseas Foreign Currency Borrowings (OFCBs) contributed $1.97 billion and external commercial borrowings (ECBs) amounted to $1.34 billion. The RBI introduced this concessional swap facility on June 5, 2026, as part of measures to bolster India's balance of payments and attract capital inflows amid global market uncertainties.
Key Details
Public sector banks (PSUs) have been particularly proactive in mobilizing these deposits, with reports indicating that they have significantly increased their efforts since the facility's announcement. According to sources familiar with the situation, PSUs have garnered at least $17 billion in inflows from the first week of June to date. In contrast, private lenders are expected to lag behind in this mobilization effort.
Background
The concessional swap facility aims to incentivize banks to attract more foreign currency deposits, which can help stabilize the Indian rupee and improve the overall liquidity in the banking system. The RBI's initiative is seen as a critical step in addressing the challenges posed by fluctuating global markets.
The influx of FCNR(B) deposits is likely to strengthen the Indian rupee and enhance liquidity in the banking sector, benefiting public sector banks in particular. Investors will watch for further updates on the effectiveness of the RBI's measures and any subsequent data releases regarding capital inflows.