The Reserve Bank of India has accelerated the timeline for non-resident deposit schemes, tightening the window for banks to mobilise foreign-currency inflows through its dollar-rupee swap facility, as part of measures to bolster the rupee.
The Reserve Bank of India has brought forward the cut-off for fresh Foreign Currency Non-Resident (Bank) deposits that can qualify for its special dollar-rupee swap facility to August 31, 2026, tightening the window for banks and non-resident depositors to use the scheme. The move comes after the central bank reopened the mechanism in June to encourage foreign-currency inflows and support the rupee, according to Business Standard and Mint.
FCNR(B) deposits are foreign-currency term deposits placed by non-resident Indians and overseas citizens of India with authorised Indian banks. Unlike rupee accounts, the principal and interest stay denominated in a freely convertible currency, which shields the depositor from exchange-rate swings. The scheme itself dates back to 1975, while the current FCNR(B) structure was introduced in 1993 to shift foreign-exchange risk away from the government and on to commercial banks, under the framework of FEMA and RBI deposit rules.
Under the swap arrangement, banks can raise fresh FCNR(B) deposits with maturities of three to five years and then exchange the foreign currency with the RBI for rupees. At maturity, the banks buy back the same foreign currency amount. The structure is designed to lower hedging costs for lenders and make these deposits more attractive, while giving the central bank an additional channel to draw in stable foreign-currency funds, as explained by Outlook Money and Kotak Bank.
When the facility was first announced on June 5 and operationalised on June 8, eligible deposits were set to be those mobilised between June 8 and September 30, 2026, with the swap window itself due to remain open until October 16, 2026, Business Standard reported. The revised deadline means banks will need to move more quickly to book qualifying deposits, even though the broader swap mechanism remains available until mid-October.
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