Foreign-currency inflows under the Reserve Bank of India's concessional U.S. dollar-rupee swap facility reached $72.8 billion as of Aug. 21, 2024 [1].
These inflows are critical for the Indian economy because they provide the central bank with tools to stabilize the rupee. By offering incentives to domestic banks and foreign investors, the RBI seeks to bolster foreign exchange reserves and reduce volatility in the currency market [1].
The facility opened on June 8, 2024 [2]. Early reports indicated that inflows had reached $40.82 billion in late June 2024 [2]. The subsequent rise to $72.8 billion shows a rapid acceleration in the adoption of the swap mechanism by financial institutions.
Of the total amount collected, $65 billion consists of Foreign Currency Non-Resident (Bank) deposits, known as FCNR(B) deposits [1]. These deposits allow non-resident Indians to maintain accounts in foreign currencies, which the RBI can then utilize through the swap arrangement.
The mechanism operates by allowing banks to swap these foreign currency deposits for rupees at a concessional rate. This process encourages the movement of U.S. dollars into the Indian banking system without requiring the central bank to spend its own reserves to maintain currency levels [1].
Reports from Mumbai-based news outlets said that the scheme has effectively drawn in more liquidity than initially projected in the first few months of operation [1], [2]. The RBI continues to manage the facility to ensure that the influx of dollars supports the broader macroeconomic goals of the government.
“Inflows under the Reserve Bank of India's concessional U.S. dollar-rupee swap facility reached $72.8 billion.”
The rapid accumulation of over $70 billion in the short window since June 2024 suggests a high appetite among investors for RBI-backed currency instruments. By leveraging FCNR(B) deposits, the RBI is essentially creating a buffer against external shocks to the rupee without relying solely on direct market intervention. This strategy allows India to increase its dollar liquidity while providing a structured exit and incentive for foreign capital.
