RBI Revives FCNR(B) Swap Window to Attract NRI Foreign Currency Deposits

The RBI announced on June 8, 2026, that authorised dealer banks can mobilise fresh FCNR(B) deposits in freely convertible currencies for three-to-five-year tenors and swap the dollar proceeds with the central bank at a predetermined rate, with the facility open for deposits raised until September 30, 2026. By absorbing the full hedging cost — estimated at over 3% — and exempting qualifying deposits from CRR and SLR requirements, the RBI has dramatically improved the economics for both banks and NRI depositors. Within days, SBI, HDFC Bank, Bank of Baroda, Yes Bank, and AU SFB raised USD deposit rates to 6–6.6%, compared with roughly 4.2–4.3% offered by American banks. A key amplifier is leverage: because the RBI has permitted Indian banks to issue letters of credit against these deposits, NRIs can borrow abroad at around 4.5% and invest the proceeds in FCNR(B) deposits at 6%+, with Jefferies analysts estimating 7–10x leverage could generate 17–27% annual dollar returns. Historical data shows the 2013 version of this scheme caused net monthly FCNR(B) additions to spike to roughly $15 billion, pushing outstanding deposits from about $15 billion to $47 billion, though those deposits' maturity in 2016 caused a sharp reversal. Analysts at Emkay Global and IDFC FIRST Bank project inflows of $40–55 billion this cycle, though the higher prevailing US Treasury yield of around 4.5% — versus near-zero rates in 2013 — narrows the spread and introduces uncertainty about the final scale of response. Separately, India is also courting foreign investors in its government securities market through tax exemptions and expanded bond index eligibility, with FPI holdings under the Fully Accessible Route rising by nearly ₹8,795 crore in the week following those announcements.