RBI’s special FCNR window pulls in record $127 billion, nearly five times 2013 mobilisation

New Delhi: India has mobilised a record USD 127.23 billion through foreign-currency deposits under the Reserve Bank of India’s special FCNR(B) programme, prompting the central bank to close the window a month ahead of schedule after achieving its liquidity objective.

Foreign Currency Non-Resident (Bank), or FCNR(B), deposits accounted for USD 127.226 billion of inflows as of August 31, according to provisional data released by the RBI on Wednesday.

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Including USD 5.26 billion raised through overseas foreign-currency borrowings (OFCB) and another USD 3.891 billion through external commercial borrowings (ECB), total mobilisation under the measures reached USD 136.377 billion.

The scale of the FCNR(B) mobilisation is particularly striking when compared with the RBI’s intervention during the 2013 “taper tantrum”. The special FCNR(B) swap window launched then had mobilised about USD 26 billion over nearly three months as India battled severe pressure on the rupee.

At USD 127.23 billion, mobilisation through the latest FCNR(B) window is nearly five times the amount raised under the comparable 2013 initiative.

The latest facility was opened on June 8 and was originally scheduled to run until September 30. The RBI, however, closed it on August 31, saying the objective of the programme had been achieved ahead of schedule.

FCNR(B) accounts allow non-resident Indians to maintain fixed deposits with Indian banks in designated foreign currencies. Since both principal and interest are denominated and repaid in foreign currency, depositors do not directly bear rupee exchange-rate risk.

The programme was structured to encourage banks to mobilise foreign currency from overseas Indians while strengthening foreign-exchange liquidity in the domestic financial system. The RBI’s measures included absorbing specified hedging costs for banks raising FCNR(B) deposits and allowing lending against the mobilised funds.

The programme has generated sizeable flows for individual lenders as well.

ICICI Bank separately said it had mobilised gross FCNR(B) deposits of USD 17.88 billion up to August 31. Loans extended by its international branches and subsidiaries against such deposits stood at USD 9 billion, while standby letters of credit issued to other banks in connection with loans against the deposits amounted to USD 3.63 billion.

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The latest mobilisation comes at a time when India’s foreign-exchange reserves are already at record levels. RBI data showed reserves jumped USD 12.422 billion to an all-time high of USD 729.328 billion in the week ended August 21.

Foreign-currency assets received through the swap mechanism would be reflected in the RBI’s foreign-currency assets, adding to the central bank’s external liquidity buffer.

The 2026 programme bears similarities to the RBI’s response to the 2013 taper tantrum, when expectations that the US Federal Reserve would begin withdrawing monetary stimulus triggered capital outflows from emerging markets and put the rupee under severe pressure.

This time, however, the mobilisation is on an altogether larger scale.

The Finance Ministry had said last week that the inflows would strengthen India’s external buffers while providing additional foreign-currency resources to banks and companies. It also attributed the response to the continuing role of overseas Indians in channelling savings into the domestic financial system.

The foreign-currency inflows coincide with a sharp build-up of domestic banking liquidity. Surplus liquidity in the banking system climbed to nearly Rs 5 lakh crore by the end of August, its highest level in more than four months, aided by foreign-currency deposit flows and government spending.

The mobilisation also comes against a volatile global backdrop even as domestic growth has remained relatively resilient. India’s GDP expanded 7.8 percent in the April-June quarter of FY2026-27, ahead of the RBI’s 7 percent projection, although growth moderated from 8.6 percent in the preceding quarter.

For the RBI, the significance of the programme goes beyond the headline USD 127-billion figure. By drawing a large pool of relatively stable foreign-currency funding into the banking system in less than three months, the window has strengthened the central bank’s capacity to manage foreign-exchange liquidity at a time of elevated geopolitical and global financial uncertainty.

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