RBI allows banks to swap NRI dollars more than once a week

The RBI has let banks tap its dollar‑rupee swap facility more than once weekly for FCNR(B) deposits over $100 million, ahead of the August 31 deadline for the special deposit scheme.
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FRANCIS MASCARENHAS

The RBI informed banks on Thursday that they may exchange dollars gathered from non‑resident Indians more than once per week, according to three currency traders, providing flexibility to manage sizable inflows ahead of the conclusion of its subsidised deposit scheme.

Key Takeaways

• RBI will let banks swap NRI dollars more than once weekly for FCNR(B) deposits over $100 million, ahead of the August 31 scheme deadline.
• The special deposit scheme has attracted more than $65 billion so far, prompting banks to seek overseas funding for depositor leverage.
• The added flexibility aims to help banks manage large inflows before the subsidised scheme closes.
• The scheme is a key part of RBI’s strategy to boost forex reserves and support rupee confidence.

The sources asked to stay unnamed because they are not authorised to talk to the press.

The action arrives just days before the August 31 cutoff for the special deposit scheme, a central component of the RBI’s strategy to attract foreign dollar inflows, aiming to boost its foreign‑exchange reserves and reinforce confidence in the rupee.

To date the scheme has attracted more than $65 billion, prompting banks to scramble for overseas funding to give leverage to prospective depositors before the programme shuts.

Banker sources said that, via a notice on its trading platform, the RBI indicated banks may use its dollar‑rupee swap facility for FCNR(B) deposits beyond their regular weekly window when the transaction exceeds $100 million.

At present banks are allotted one day each week for these swaps with the central bank; trades under $100 million will continue to be confined to that day, the RBI noted in the message.

The central bank did not immediately reply to an email requesting comment.

One source said the measure is intended to help banks cope with an expected increase in dollar liquidity.

Permitting banks to use the swap facility more often could let the RBI enable them to dump surplus dollars to the central bank instead of waiting for their scheduled weekly swap day, thereby limiting the impact of a rapid buildup of dollar liquidity.

The effect of excess dollar accumulation showed up on Thursday, as the one‑day dollar/rupee swap cost jumped to a peak of 2.5 paisa, well above the typical 0.40‑0.50 paisa observed in recent sessions.

Traders noted that a spike in inflows can leave banks holding excess dollar balances that must be rolled over in the overnight swap market until their assigned day to use the RBI’s swap facility.

This pushes up the overnight cost of turning surplus dollars into rupees, with the pressure spilling into the wider forward market and raising hedging expenses.

The one‑month annualised implied hedging cost rose by more than 30 basis points at one point on Thursday before easing a bit after the RBI’s action.

Published on August 27, 2026