The Reserve Bank of India’s (RBI) special dollar-rupee forex swap facility has attracted $143.6 billion through FCNR(B) deposits, overseas foreign currency borrowings (OFCBs) and external commercial borrowings (ECBs), according to data released by the central bank on Monday.
The FCNR(B) window closed on August 31, while the swap facility for ECBs and OFCBs will remain open until December 31, 2026.
FCNR(B) deposits accounted for the bulk of the inflows at $133 billion. FE had reported on September 16, citing sources, that FCNR(B) inflows had reached $132.9 billion. The latest official figure is $5.8 billion higher than the RBI’s previous provisional estimate of $127.2 billion. OFCBs and ECBs contributed $5.32 billion and $5.30 billion, respectively.
The surge in foreign currency deposits also boosted overall deposit growth of scheduled commercial banks, which accelerated to 17.76% year-on-year as of August 31, the highest since 2019.
The large forex inflows have contributed to a sharp increase in banking system liquidity. The liquidity surplus widened from Rs 1.66 lakh crore on June 7 to a peak of Rs 11.16 lakh crore on September 6. It has since moderated, with net liquidity surplus at Rs 6.05 lakh crore as of September 20.
The RBI has been absorbing excess liquidity through instruments including variable rate reverse repo (VRRR) auctions and open market operations (OMOs).
The rupee initially strengthened following the announcement of the FCNR(B) scheme, appreciating from 95.7113 against the dollar on June 8 to 94.33 on June 18. The gains, however, proved short-lived, with the currency weakening to 96.57 by July 24.
In September, the rupee strengthened to 94.4913 on September 7 before falling to 95.96 on September 15. On Monday, it closed at 95.8125 against the dollar, gaining 0.06%.
Meanwhile, India’s foreign exchange reserves climbed from $681.6 billion to an all-time high of $785.7 billion before declining by nearly $5 billion in the week ended September 11.