RBI Launches Twin USD-INR Forex Swap Facility to Attract Foreign Currency Inflows

Current Context: On June 8, 2026, the Reserve Bank of India (RBI) announced two US dollar–rupee forex swap facilities to attract foreign inflows and strengthen the rupee.

• Facility 1 – FCNR(B) Deposits: Foreign Currency Non‑Resident (Bank) Deposits → swap window for fresh deposits (tenor 3–5 years), mobilized between June 8–Sept 30, 2026, with swaps till Oct 16, 2026.
• Banks sell USD to RBI and buy back “at par,” transferring currency risk to RBI; enables banks to offer 5.5–6% interest rates to NRIs.
• Facility 2 – ECBs & OFCBs: External Commercial Borrowings (ECBs) by PSUs and Overseas Foreign Currency Borrowings (OFCBs) by banks, eligible for maturities ≥3 years.
• Conducted at a fixed cost of 1.5% per annum, far below market hedging costs, making overseas borrowing cheaper.
• This facility remains open till Dec 31, 2026, with swap window closing Jan 15, 2027.

Question:

Q. 1 Which deposit category was covered under the first forex swap facility introduced by the RBI in June 2026?
a) Non-Resident External (NRE) Deposits
b) Foreign Currency Non-Resident (Bank) [FCNR(B)] Deposits
c) Resident Foreign Currency Deposits
d) Recurring Deposits

Answer: b) The first facility targeted fresh FCNR(B) deposits mobilized by banks from Non-Resident Indians (NRIs).