Public Sector Undertakings (PSUs) have requested the RBI to extend the concessional dollar-rupee swap window for external commercial borrowings by three months till March 2027 as most of the capital requirement for them comes in fourth quarter, sources said.
The Reserve Bank of India (RBI) in June opened a special US Dollar-Rupee forex swap window to give cheap currency hedging support to PSUs raising External Commercial Borrowings (ECBs). The window is available till December 31, 2026.
If the window is extended, it would lead to higher mobilisation of funds in foreign currency, sources said, adding, it would also lead to higher capex.
According to an SBI Research report, FCNR (B) deposits would be in the range of USD 65-70 and including Overseas Foreign Currency Borrowings (OFCBs) and ECB, they would be USD 80-85 billion.
So far, (till July 17), Foreign Currency Assets (FCA) has increased by USD 7.6 billion (since June 8), while till July 17 as per RBI deposit mobilization, the numbers were USD 17.4 billion for FCNR(B) flows, possibly reflecting that exchange process at RBI by banks were happening gradually, it said.
Public Sector Banks, front-led by larger banks, are apparently anchoring the drive, ensuring incremental flows by leveraging not only the deposits, but also the trust built with materially significant clientele spread across various geographies and remaining tacitly agile by shifting their strategy to an optimally blended Onshore-Offshore game plan, the report said.
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It said that significant majority of existing FCNR deposits which are going to mature in August or September 2026 will be renewed under the new scheme (gravitated by higher interest rates) and will boost the FCNR (B) inflows, wherein total amount mobilized so far in 45 days would have easily crossed the total amount mobilized in 2013 in 3 months.
FCNR(B) deposits may have already crossed 2013 level of USD 26 billion in just 45 days. USD 26 billion were collected in three months during 2013.
In a bid to attract foreign currency deposits by Non-Resident Indians (NRIs), Overseas Citizens of India (OCIs) and Persons of Indian Origin (PIOs), the RBI last month withdrew the interest rate ceiling on fresh FCNR(B) deposits of 3-5 years' maturity. The special window is open till September 30.
For ECBs and OFCBs, banks have been given time till December 31, 2026, by the Reserve Bank of India.
The move came after FCNR(B) deposit inflows weakened sharply, with net inflows dropping to just USD 946 million in FY26, down from USD 7.1 billion in FY25.
In 2023, the RBI had introduced similar schemes when dollar outflows were high, triggered by the taper tantrum.
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)
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