Record FCNR (B) inflows as banks mobilise $127 bln

Mumbai: Banks have mobilised a whopping $127.22 billion from foreign currency non-resident (bank) FCNR (B) deposits in less than three months till the scheme closed on August 31, the Reserve Bank of India (RBI) said. Total inflows from special schemes to attract dollars including FCNR (B), overseas foreign currency borrowings (OFCBs) and external commercial borrowings (ECBs) stood at $136.37 billion on August 31, the RBI said in provisional data released on Tuesday.

In the last ten days of the window of the special deposit scheme aimed at the Indian diaspora, resulted in the mobilisation of another $61.8 billion in FCNR (B) almost double the $65.4 billion raised up to August 21, RBI data showed.

Data released on Wednesday showed FCNR (B) deposits accounted for over 93% of the total dollar inflows, with banks adding the most dollars to the kitty, in the last ten days resulting in a strong close to the special window.


The rush to collect dollars picked up pace after the RBI advanced the timeline for banks to accept incentives-laden FCNR (B) deposits by a month to August 31 noting the strong inflows through the scheme. However, the swap scheme for ECBs and OFCBs will continue until December 31, 2026, as originally planned.

The facility, operationalised on June 8 to boost dollar inflows and strengthen foreign exchange reserves, allows banks to swap eligible overseas borrowings with the central bank at concessional rates, significantly lowering their cost of funds. Under the new guidelines, banks can swap FCNR(B) inflows with the RBI under a zero-cost hedging facility available until September 11.

“It is important to recognise that this represents a future dollar-denominated debt liability, with an indirect fiscal cost through lower RBI dividends -- potentially amounting to Rs 1trillion plus cumulatively. The funds raised therefore need to be deployed judiciously and productively to mitigate these first-order costs,” said Madhavi Arora, chief economist Emkay Global Financial Services.

Separately, government sources said that the international banking units (IBUs) of public sector banks had together disbursed loans of $52.82 billion for depositors of the FCNR (B) scheme under the special window. Between April to August 2026, public sector banks raised $11.62 billion through ECBs and $11.12 billion through bonds, government sources said.

Record Haul

Inflows through the FCNR(B) scheme have exceeded the $26 billion mobilised under a similar scheme in 2013, in less than three months after the latest window opened on June 8.

The scheme has helped swell foreign exchange reserves to a record high. India's foreign exchange reserves touched a record high of $729.3 billion as of August 21, latest data showed. India’s foreign exchange stockpile surged nearly $50 billion since June. Latest data showed the forex stash has risen for eight consecutive weeks.

Reserves increased $12.4 billion during the week ended August 21, with foreign currency assets increasing $9.4 billion to $591 billion, while the value of gold reserves rose by $2.8 billion to $114 billion.