RBI’s Draws $ 133 Billion Through FCNR (B) Deposits

its special Foreign Currency Non-Resident (Bank) or FCNR(B) deposit window, latest data released on Monday showed. Including the inflows garnered through external commercial borrowings at $ 5.2 billion and Overseas Foreign-currency borrowings (OFCBs) at $5.32 billion, the
total inflows garnered are at a massive $143.5 billion.

The RBI had announced the USD-INR Forex Swap facility covering FCNR(B) deposits, External commercial borrowings (ECBs) and overseas foreign currency borrowings (OFCB) inflows on June 8, 2026 to attract dollar flows and shield the falling rupee. The FCNR (B) scheme was open till
August 31, 2026 while for ECBs and OFCBs the scheme remains open till December 31, 2026.

S&P Global Ratings on Monday gave a thumbs up to the central bank’s special deposit scheme describing the mobilisation as a “shot in the arm” for banks that had been facing tight funding conditions for the last four years with credit growth exceeding deposit growth.

The FCNR (B) deposits represent nearly 4.5 per cent of the banking system’s total deposit base as of March 31, 2026.

The Reserve Bank of India (RBI) supported the special deposit scheme by absorbing the entire hedging cost on the principal amount of FCNR(B) deposits with maturities of three to five years. With the central bank bearing hedging costs, banks were able to offer attractive interest rates on the US dollar deposits.

“The FCNR (B) deposits have tenors of three to five years, and will improve the bank’s funding stability and bridge asset-liability duration gaps,” S&P Global Ratings credit analyst Geeta Chugh said.

According to S&P, the banks’ balance sheets could increase in proportion to the amount raised through the FCNR B accounts, as banks have been allowing customers to borrow more cash against their deposits and place it in FCNR (B) accounts, S&P said.

“Low-spread loans and the offshore borrowings that fund them are on bank balance sheets. We therefore forecast the increase could be about $190-$220 billion overall, assuming 50-75 of the deposits are leveraged through loans against pledged FCNR (B) deposits,” S&P said.