India's special USD-INR forex swap facility drew $136.4 billion in foreign-currency inflows by Aug. 31, with FCNR(B) deposits accounting for about 93% of the total, according to provisional data from the Reserve Bank of India.
FCNR(B) deposits brought in $127.2 billion, while overseas foreign-currency borrowings contributed $5.26 billion and external commercial borrowings $3.89 billion. The figures are subject to final reporting, accounting and reconciliation, the RBI said.
The scale of inflows accelerated sharply in the final days of the FCNR(B) window. The Finance Ministry said on Aug. 24 that the facility had attracted $73 billion as of Aug. 21, including $65.4 billion through FCNR(B) deposits.
The RBI introduced the facility on June 8 covering FCNR(B) deposits, overseas foreign-currency borrowings and external commercial borrowings. The FCNR(B) window closed Aug. 31, while the other two channels remain open until Dec. 31.
The government said the response had surpassed the $26 billion raised through the RBI's 2013 FCNR(B) swap scheme and prompted the central bank to bring forward the FCNR(B) closing date from Sept. 30.
The Finance Ministry said the inflows would strengthen India's external buffers and attributed the response to confidence among the Indian diaspora in the country's banking system and economy.
Why The Facility Matters
The RBI introduced the special USD-INR forex swap facility on June 8 for FCNR(B) deposits, overseas foreign-currency borrowings and external commercial borrowings. The scheme was designed to mobilise foreign-currency inflows through these channels.
The government said on Aug. 24 that the response had already exceeded the scale and pace of the RBI's 2013 FCNR(B) swap scheme, which raised about $26 billion over roughly three months. It also said the RBI had advanced the closure of the FCNR(B) window from Sept. 30 to Aug. 31 after achieving its objective ahead of schedule.
The Finance Ministry described the inflows as part of an effort to strengthen India's external buffers. It said the scheme had mobilised large-scale non-resident deposits and commercial institutional funding.
The ministry also said the response reflected confidence among the Indian diaspora in the country's banking system and economy. It said non-resident Indians had channelled savings into FCNR(B) deposits at a pace that exceeded expectations.
ECB, OFCB Windows Remain Open
While the FCNR(B) component ended on Aug. 31, the RBI said the facility for external commercial borrowings and overseas foreign-currency borrowings will remain open until Dec. 31.
The current $136.4 billion figure is therefore a provisional snapshot of inflows reported through Aug. 31 and does not represent the final amount that could be mobilised under the overall facility.
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