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2 August 2026

RBI foreign currency swap facility

The RBI's foreign currency swap facility is a specific monetary policy tool used for macroeconomic management and balance of payments stability, which is a core topic under the Indian Economy syllabus.

1 min read Day 5 of 10 1 questions 1 prelims

Notes

  • The Reserve Bank of India (RBI) introduced a concessional swap facility on June 5 to encourage foreign currency inflows and strengthen India's Balance of Payments (BoP).
  • The facility covers fresh Foreign Currency Non-Resident (FCNR(B)) deposits, Overseas Foreign Currency Borrowings (OFCB), and External Commercial Borrowings (ECB).
  • As of July 31, the facility has successfully mobilised $40.82 billion.
  • The RBI reported steady forex inflows through this mechanism since its inception on June 8.

Part of a longer story

This is day 5 of 10 in RBI foreign currency swap facility, which has been running since 14 July 2026. Reading it whole is usually worth more than reading today alone — the exam asks how something developed.

Questions

  1. Explain the role of concessional foreign currency swap facilities in managing India's Balance of Payments volatility. How do such instruments influence the inflow of foreign capital? 150 words
    Attempt this — 150 words in 8 min
    0 / 150 words 8:00

Prelims

  1. The RBI's concessional swap facility, introduced to strengthen the Balance of Payments, covers which of the following inflows?

Syllabus

Topics

Sources

250words.in · https://250words.in/daily/2026-08-02/rbi-foreign-currency-swap-facility