Overview
- Provisional RBI data show banks mobilised about $127.23 billion in FCNR(B) deposits and totalled roughly $136.38 billion under the special USD‑INR swap facility as of August 31, 2026, and the FCNR(B) window was closed early on that date.
- The scheme worked by the RBI absorbing forex hedging costs for three‑ to five‑year FCNR(B) deposits, which removed currency risk for banks and made dollar‑denominated deposits unusually attractive to NRIs.
- The rush pushed system liquidity sharply higher — reports cite a banking surplus around ₹6.65 lakh crore — and banks have begun cutting FCNR(B) rates while the RBI runs VRRR auctions and may use open market operations or other tools to drain excess liquidity.
- The deposits create time‑bound foreign‑currency liabilities that will mature in three to five years, producing rollover and reversal risk and likely indirect fiscal costs such as lower future RBI transfers to the government.
- The tool echoes a 2013 playbook but on a much larger scale; ECB and OFCB routes remain open until December 31 so final inflows could still rise and markets will watch reserve earmarking, rupee movement, and RBI policy steps next.