Current Context: On 27 August 2026, the Reserve Bank of India relaxed access rules for its USD-INR swap facility linked to Foreign Currency Non-Resident (Bank), or FCNR(B), deposits. The move came just before the 31 August 2026 deadline for a special scheme designed to attract overseas dollar deposits, strengthen India's foreign-exchange reserves and support the rupee.
Key Points:
- Earlier, participating banks were assigned one fixed day each week to access RBI's dollar-rupee swap facility for FCNR(B) deposits.
- RBI has now allowed banks to access the facility outside their designated weekly window when the FCNR(B) swap transaction is above USD 100 million.
- Transactions below USD 100 million will continue to be processed only on the bank's designated weekly day.
- FCNR(B) stands for Foreign Currency Non-Resident (Bank). It allows NRIs to maintain term deposits with Indian banks in permitted foreign currencies.
- Under the swap facility, banks can transfer the dollars mobilised through FCNR(B) deposits to RBI and receive Indian rupees, helping them manage their foreign-currency and rupee liquidity.
- The relaxation was introduced because large FCNR(B) inflows were leaving banks with excess dollars while they waited for their weekly RBI swap window. This had pushed up short-term dollar-rupee swap and hedging costs.
- The measure allows banks to transfer large dollar inflows to RBI more quickly, improving liquidity management and reducing pressure in the foreign-exchange swap market.
- The special FCNR(B) scheme formed part of RBI's broader effort to attract foreign capital, strengthen India's forex reserves and provide support to the Indian rupee. India's forex reserves reached a record USD 729.33 billion as of 21 August 2026.
Question
Q1. RBI allowed banks to access the FCNR(B) dollar-rupee swap facility outside their designated weekly window for transactions above what amount?a) USD 25 million
b) USD 50 million
c) USD 100 million
d) USD 250 million
Answer: c) RBI relaxed the weekly access rule on 27 August 2026, allowing banks to undertake FCNR(B)-linked dollar-rupee swaps outside their fixed weekly window when the transaction exceeds USD 100 million. The relaxation helps banks manage large foreign-currency inflows and reduces pressure in the short-term swap market.
