The Reserve Bank of India has mandated daily reporting for FCNR(B) deposits and external borrowings to monitor the success of its new special swap scheme. This move aims to track foreign currency accretion as the central bank provides full hedging cost coverage for deposits until September 30, 2026. Analysts expect these inflows to impact the Indian Rupee.
What Happened
The Reserve Bank of India (RBI) has issued a new directive requiring commercial banks to submit daily reports on Foreign Currency Non-Resident (FCNR(B)) deposits collected under its special swap scheme. This mandate, which began on June 22, 2026, also includes daily reporting for External Commercial Borrowings (ECBs) and Overseas Foreign Currency Borrowings (OFCBs). Banks are required to file this data with the Financial Markets Operations Department to provide the central bank with a real-time view of foreign currency inflows.
Why It Matters For The Markets
This reporting requirement allows the RBI to closely monitor the success of its current liquidity and currency support measures. Under the special swap scheme, the central bank has committed to covering the full cost of hedging for fresh FCNR(B) deposits gathered between June 8 and September 30, 2026. By tracking this data daily, the RBI can better assess whether the policy is successfully attracting enough foreign capital to support the Rupee and bolster foreign exchange reserves. For investors, this data serves as a pulse check on the effectiveness of the central bank's intervention strategy.
Historical Context and Expectations
The current scheme draws comparisons to the 2013 swap window, which helped attract approximately $26 billion in inflows during a period of market volatility. The current initiative covers a longer period—nearly four months—compared to the window offered in 2016. Data from the financial year 2025-26 showed a significant dip in FCNR(B) inflows, which fell to $946 million from $7.08 billion in the previous year, leaving outstanding deposits at $33.8 billion as of March 31, 2026. Analysts at Nomura have projected that the current scheme could attract up to $55 billion in inflows, with the highest momentum expected in August and September.
What Investors Should Monitor
Investors and market participants are focusing on the volume and velocity of these inflows. A strong inflow of foreign currency can provide stability to the Indian Rupee, potentially reducing volatility in the currency markets. Furthermore, the ability of banks to attract these deposits may influence banking sector liquidity. The key monitorables for the market include the weekly or daily data releases from the RBI, the total amount of hedging costs covered by the central bank, and any subsequent impact on overall foreign exchange reserve levels.