The concessional swap facility of the Reserve Bank of India (RBI) can help India attract foreign exchange inflows of US$ 80 to 85 billion. According to the research report ‘Ecowrap’ of State Bank of India (SBI), the objective of this scheme is to increase the inflow of foreign capital into the country and strengthen the external financial position.
RBI Swap Facility: The concessional swap facility of the Reserve Bank of India (RBI) can play an important role in strengthening India’s external sector and foreign exchange liquidity. According to estimates of a research report by State Bank of India (SBI), a total of 80 to 85 billion US dollars of foreign capital inflow is likely to come to India through this scheme. The report believes that this could strengthen the country’s balance of payments and reduce pressure on the current account deficit (CAD) in FY 2027.
According to SBI’s economic research report ‘Ecowrap’, the objective of this initiative of RBI is to promote the inflow of foreign exchange and strengthen the external financial position of the country. At a time when there is uncertainty in the global economy, increased inflow of foreign capital is considered important for India.
How much foreign capital inflow has come so far?
According to the SBI report, till July 17, foreign exchange inflow of about US $ 20 billion was recorded through various channels related to this scheme. The biggest contribution in this was from FCNR (B) deposits, through which about US $ 17.406 billion was raised. In addition, about US$ 1.97 billion were raised through foreign currency borrowings (OFCBs) and about US$ 1.342 billion through external commercial borrowings (ECBs).
The report estimates that the total figure of FCNR (B) deposits could reach US$65 to 70 billion in future. If this includes potential capital inflows from OFCBs and ECBs, the total foreign capital inflows are likely to reach US$ 80 to 85 billion.
What is RBI’s concessional swap facility?
RBI had announced several measures in June 2026 to strengthen the external sector and encourage foreign capital inflow into the country. Under these measures, the concessional swap facility was implemented. One of the main objectives of this scheme is to provide better conditions to banks for raising foreign exchange. Through this, efforts are being made to attract capital from foreign currency deposits and other external financial sources.
According to the report, the facility related to FCNR (B) deposits is scheduled to be available till September 30, 2026, while the provisions related to OFCBs and ECBs are planned to continue till December 31, 2026. These measures were announced at a time when there was uncertainty and volatility in global financial markets. In such an environment, maintaining strong foreign exchange reserves and capital inflows is important for any emerging economy.
What is the impact on balance of payments and current account deficit?
The SBI report believes that if the estimated inflow of foreign capital comes to India, it can strengthen the country’s Balance of Payments. Increasing availability of foreign exchange can also help in reducing pressure on the external sector. Additionally, increased foreign capital inflows are expected to help limit India’s current account deficit in FY2027.
However, the final impact on CAD will depend on a number of factors such as import-export balance, crude oil prices, global trade and domestic economic activities. Following the RBI measures, public sector banks have played an important role in the process of mobilizing foreign exchange. The activeness of public sector banks, especially in attracting FCNR (B) deposits, is being considered an important reason for the success of this scheme.
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