21 July 2026

RBI foreign currency swap facility mobilises over $20 billion

The news detail RBI's foreign currency swap facility and forex inflow mechanisms, which are directly relevant to resource mobilization and balance of payments management under the Indian economy syllabus.

Notes

• The Reserve Bank of India's (RBI) foreign currency swap facility mobilised a total of $20.72 billion in foreign exchange inflows up to July 17.
• The breakdown of the inflows mobilised consists of $17.4 billion via Foreign Currency Non-Resident-Bank (FCNR(B)) deposits, $1.97 billion via Overseas Foreign Currency Borrowings (OFCBs), and $1.34 billion via External Commercial Borrowings (ECBs).
• The central bank announced a series of measures on June 5, including offering concessional swaps for fresh FCNR(B) deposits, OFCBs, and ECBs, aimed at incentivising capital inflows and strengthening India's balance of payments.
• The swap facility operationalised through authorized dealer banks saw steady forex inflows starting June 8.

Questions

1. Discuss the role of foreign currency swap facilities and deposit incentives in managing external sector liquidity and strengthening India's Balance of Payments. 150 words
   Attempt this — 150 words in 8 min

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Prelims

1. Under the RBI's special foreign currency swap facility, foreign exchange inflows were mobilised through which of the following avenues?

   1. A FCNR(B) deposits, External Commercial Borrowings (ECBs), and Overseas Foreign Currency Borrowings (OFCBs)
   2. B Foreign Portfolio Investment (FPI), American Depository Receipts (ADRs), and Global Depository Receipts (GDRs)
   3. C Special Drawing Rights (SDRs), Sovereign Foreign Currency Bonds, and Bilateral Swap Lines
   4. D Personal Remittances, Foreign Direct Investment (FDI), and Non-Resident External (NRE) accounts

Syllabus

• Indian Economy GS3

Topics

• Reserve Bank of India (RBI)
• Monetary Policy
• Foreign Exchange Reserves

Sources

• RBI special swap sees over $20 bn inflow