RBI introduces USD-INR swap facility for fresh FCNR(B) deposits
AD Category-I bank treasury teams can swap fresh 3-to-5-year FCNR(B) deposits into USD with RBI at the FBIL rate, but must maintain separate records, file a conformity declaration, and act before the 16 October 2026 window closes
Change
On 8 June 2026, the Reserve Bank of India (RBI) introduced a US Dollar-Rupee forex swap facility for fresh FCNR(B) deposits of three-to-five-year tenor mobilised by AD Category-I banks; it is effective immediately and open until 16 October 2026 for deposits mobilised through 30 September 2026.
Why it matters
AD Category-I banks may sell US Dollars to RBI in multiples of USD one million at the FBIL Reference Rate and buy back the same amount at the same rate at swap maturity, at par, with the swap tenor matching the underlying three-to-five-year deposit. The facility may be used once weekly, capped at eligible deposits mobilised in preceding weeks. Banks must maintain separate records and audit trails, furnish a signed conformity declaration per swap request, and observe a one-year deposit lock-in; swaps with RBI are non-cancellable. Para 402 of the Commercial Banks – Credit Facilities Directions, 2025 is disapplied for these deposits. The window is time-bound: deposits qualify only if mobilised between the circular date and 30 September 2026, and the facility closes on 16 October 2026.
Implications
- — AD Category-I bank treasury and forex-operations teams must set up the swap workflow — separate FCNR(B) record-keeping with audit trails, signed conformity declarations per request, USD-equivalent conversion at prevailing market rates for non-USD currencies, and the once-weekly availment cap — to use the facility before it closes, or forgo the hedging benefit on eligible deposits.
- — Banks mobilising fresh FCNR(B) deposits must observe the one-year deposit lock-in and the rule that swaps undertaken with RBI cannot be cancelled, factoring the non-cancellable swap commitment into asset-liability and liquidity planning.
- — Compliance and product teams must note that para 402 of the RBI (Commercial Banks – Credit Facilities) Directions, 2025 does not apply to deposits under this scheme, and reconcile internal deposit-pricing and credit-facility policies accordingly within the extant RBI ceiling.
See full brief
Use 1 free preview to unlock implications, who’s affected, what to watch, and Clarify for this brief.
2 free previews left this month · Resets 1 Jul
Source