RBI FCNR(B) Scheme, NRI Deposits: India attracted USD 127.23 billion in Foreign Currency Non-Resident (FCNR-B) deposits under the Reserve Bank of India’s special USD-INR forex swap facility by August 31, the closing date of the window, after a strong response from the Indian diaspora prompted the central bank to advance its closure by a month.
The RBI launched the special USD-INR forex swap facility on June 8, 2026, covering FCNR(B) deposits, Overseas Foreign Currency Borrowings (OFCBs) and External Commercial Borrowings.
The facility was introduced to strengthen India’s external sector position and support foreign exchange liquidity amid global market uncertainties.
According to RBI data, total inflows under the measures stood at USD 136.377 billion as of August 31. FCNR(B) deposits alone accounted for USD 127.226 billion on a provisional basis.
FCNR-B window closed ahead of schedule
The strong response led the RBI to advance the closure of the FCNR(B) window from September 30 to August 31, having achieved its objective ahead of schedule.
Under the scheme, banks offered attractive interest rates to mobilise foreign-currency deposits from non-resident Indians.
FCNR(B) deposits are foreign-currency-denominated fixed deposits, with both the principal and interest repayable in the same foreign currency.
OFCBs contributed USD 5.26 billion to the inflows, while ECBs accounted for USD 3.891 billion, taking the total inflows to USD 136.377 billion.
The swap scheme for ECBs and OFCBs will continue to remain open until December 31, 2026.
‘$127 billion is actually borrowed money, not earned money’
Sidharth Sogani Jain, Founder, CEO & Fund Manager at Blue Aster Capital and CREBACO Global, told ET Now that the FCNR inflows should not be viewed as dollars earned by India through exports.
“127 billion dollars is actually borrowed money, not earned money. India is not exporting anything to ‘earn’ this. On maturity, both principal and interest are repayable in dollars.”
Jain said the repayment of the deposits would require India to source dollars in the future and questioned who would ultimately bear the associated cost.
“Therefore, the RBI must find genuine dollars to repay the 127 billion dollars plus interest. The catch is who’s carrying the cost.”
‘Currency risk hasn’t disappeared’
“To attract NRIs, the RBI is bearing the entire hedging burden, which is roughly 3.5%. This means the currency risk hasn’t disappeared. It has just shifted on the central bank’s balance sheet. If the rupee weakens further before this matures, the RBI will have to bear the loss. In short, this is a quick fix.”
He also argued that India could have focused on measures to generate dollars through exports rather than relying on borrowing.
“However, compared to our dollar reserves, 127 billion dollars is not a large amount. But the point is, instead of this, India could have boosted exports through subsidies, tax relief, etc. Instead of borrowing, we could have earned these dollars. I don’t think the rupee will reach 80-90 levels anytime soon.”
Samir Arora, Founder and Fund Manager at Helios Capital Management, in a post on X, said that FCNR redemption reserve is about expectations management.
Arora said India should continue building its foreign exchange reserves, potentially taking them towards the USD 1 trillion mark, but argued that a separate FCNR redemption reserve would serve a different purpose.
“India should get more FX reserves so that they are at 1 Trillion etc but the real purpose of a FCNR redemption reserve is not to replace or change any other effort by the govt or RBI.”
Arora said the reserve would primarily help address concerns over a potential large outflow when FCNR deposits eventually mature.
“It is purely for expectations management and to be able to say – that this is not something new and we already know that- when critics say that there will be a big outflow when these FCNR deposits mature (they will not say it now but when there is one yr left).”
‘There is no practical difference but a reporting difference’
Arora said setting aside funds according to the maturity schedule would allow the RBI and government to present reserves after accounting for the FCNR redemption requirement, while the money would continue to remain with them.
“By putting aside money aside every month to match the maturity schedule, RBI/GOI will be stating its FX reserves net of this FCNR reserve (although it will be transparent that the amount is still with them and earning whatever the rest of the reserves are earning etc) so there is no practical difference but a reporting difference and according to me that makes a big difference.”
