RBI ends the FCNR(B) swap facility a month early: What changed and why
August 26, 2026
The Reserve Bank of India has closed its special FCNR(B) swap facility a full month ahead of schedule, moving the deposit deadline forward from 30 September to 31 August 2026.
This year, on June 8, The RBI launched the special USD-INR forex swap facility for FCNR(B) deposits, to absorb the currency-hedging costs faced by banks and encourage NRIs to bring in longer-term foreign-currency deposits.
Although, on 5 August 2026, the RBI Governor said at the monetary policy press conference that there was no proposal to close the FCNR(B) swap scheme early, nine days later, on 14 August, the RBI closed the scheme.
The reason isn’t weakness, it’s that the scheme worked faster than the RBI expected, drawing in more than $50 billion and pushing forex reserves past $707 billion. In this article we explain what changed, why it happened, and what it means if you’re an NRI still weighing a deposit.
What actually changed in the FCNR(B) deadline The mechanics are narrow, but the deadline moved sharply forward:
Before Now FCNR(B) deposit window Banks could mobilise fresh deposits until 30 September 2026 Deadline pulled forward to 31 August 2026 Dollar-rupee swap window Banks could execute swaps with the RBI until 16 October 2026 Deadline pulled forward to 11 September 2026 Everything else stays intact. Deposits already booked keep their agreed rates and terms for the full tenor, subject to the usual one-year lock-in.
What is the special FCNR(B) deposit scheme, and how does the RBI swap actually work?
Why did the RBI exit early? The scheme was announced in early June and operationalised on 8 June. It was initially set to run into autumn.
By 13 August, banks had raised about $52.3 billion through FCNR(B) deposits. Including the borrowing channels, total inflows under the facility had reached about $56.85 billion. The scheme could have brought in an estimated $80-85 billion if it had continued for its full duration.
The inflows also increased India’s foreign-exchange reserves. Reserves rose by more than $14 billion in one week in early August, taking them above $707 billion.
The RBI therefore ended the scheme before its original end date. The deposits had already brought in a large amount of foreign currency, so continuing the scheme would have brought in more dollars and added more rupee liquidity to the banking system.
What it means for NRIs right now For NRIs considering an FCNR(B) deposit, the window is shorter. Deposits opened before 31 August 2026 qualify for the concessional swap-backed rates. After that, rates are expected to move back toward the ordinary 3-4% range that prevailed before the scheme began.
Deposits already opened are unaffected. Their terms remain in place for the full tenor.
Key takeaways The RBI moved the FCNR(B) deposit deadline from 30 September to 31 August 2026, and the swap deadline from 16 October to 11 September. The cause was an overshoot of inflows — about $52.3 billion via FCNR(B) by 13 August, ~$56.85 billion in t
