Frontloaded inflows of $8-9 bn at systemic level possible via fresh FCNR(B) deposits: SBI Eco Research

FCNR (B) deposit are likely to be front loaded under the RBI’s limited period concessional swap window for banks, with the flows estimated in the range of $8-9 billion on systemic level currently
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Yohaan Ashish Varghese _12194

SBI’s Economic Research Department noted that inflows into Foreign Currency Non‑Resident (Bank) deposits are expected to be front‑loaded under the RBI’s limited‑period concessional swap window for banks, with total flows projected at around $8‑9 billion across the system.

The ERD team explained that, building on the success of the 2013 programme – when the RBI offered a simple buy/sell foreign‑exchange swap covering only the principal portion of the deposits – this time the mechanism has been calibrated more carefully, making FCNR(B) inflows likely to arrive early.

Four reasons

They listed four factors driving the inflows: the RBI bears the full hedging cost on fresh FCNR(B) principal, giving banks relief on cost and spread.

Additionally, clear guidelines on SBLC (standby letter of credit) and leverage have been introduced upfront, enabling an early start and building momentum – unlike the earlier scheme where about 60 % of the flows arrived in the final month.

Referring to the extended four‑month window this time, SBI economists observed that it gives Indian banks and their foreign counterparts or correspondent banks enough time to assess the evolving situation and adjust structures or covenants as needed.

Moreover, the focus in 2026 is on mobilising funds for five‑year tenors, rather than the three‑year (or shorter) tenors that were the only option in 2013, which should enhance stability in capital‑flow management and reduce redemption pressures.

The ERD officials added that, despite the anticipated inflows from this source and strong buying by FPIs through June 2026 – especially in the debt segment, where about $7.1 billion was invested due to the government’s tax‑treatment incentives – the impact on the rupee has been milder than expected, although foreign‑currency assets have risen slightly.

Published on July 13, 2026