Reserve Bank of India (RBI) Introduces US Dollar-Rupee Forex Swap Facility for Fresh FCNR (B) Deposits

Key facts

• The Reserve Bank of India (RBI) introduced a US dollar-rupee forex swap facility for fresh Foreign Currency Non-Resident (Bank) [FCNR (B)] deposits to attract foreign capital.
• The facility is available to Authorised Dealer (AD) Category I banks for fresh FCNR (B) deposits mobilised for a minimum tenor of three years and a maximum of five years.
• Under the arrangement, banks can sell US Dollars in multiples of USD 1 million to the RBI and simultaneously agree to buy back the same amount at the end of the swap period.
• The underlying deposits have a mandatory lock-in period of one year, and forex swaps undertaken with the RBI under this facility cannot be cancelled.
• The RBI also introduced the swap facility for External Commercial Borrowings (ECBs) of public sector undertakings (PSUs) and Overseas Foreign Currency Borrowings (OFCBs) with a minimum maturity of three years.