FCNR-B And ECB Swap Schemes Take Effect As RBI Announces Operational Guidelines

The Reserve Bank of India (RBI) on June 8 issued operational guidelines for authorised dealer banks and public sector enterprises to implement the recently announced swap facilities for Foreign Currency Non-Resident Bank [FCNR(B)] deposits and External Commercial Borrowings (ECBs), aimed at supporting foreign capital inflows.
The guidelines for both FCNR(B) deposits and ECB swap facilities came into effect from June 8.

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FCNR-B Swap Facility Open Till September-End Deposits

According to the RBI notification, all Authorised Dealer Category-I banks can avail themselves of the FCNR(B) swap facility for fresh and renewed deposits with a minimum tenor of three years and a maximum tenor of five years.

The facility will be available for FCNR(B) deposits mobilised between June 8 and September 30. The swap window itself will remain open until October 16.

Banks can raise FCNR(B) deposits in any permitted foreign currency. However, the RBI swap facility will be available only for U.S. dollar deposits.

Under the arrangement, banks can sell U.S. dollars to the RBI in multiples of $1 million and simultaneously agree to buy back the same amount at the end of the deposit tenor.

In the first leg of the transaction, banks will sell U.S. dollars at the FBIL reference rate. The second leg of the swap will take place at the same exchange rate when the transaction matures, resulting in no swap premium.

The RBI said banks are free to determine deposit interest rates based on their internal policies, subject to existing regulatory ceilings.

ECB Swap Facility to Remain Available Till January 2027

The RBI also detailed the operational framework for the ECB swap facility.

Under this arrangement, banks can sell U.S. dollars and repurchase the same amount at maturity. Unlike the FCNR(B) facility, the ECB swap will carry a fixed rate of 1.5% per annum, compounded semi-annually.

In the first leg, banks will sell U.S. dollars at the FBIL reference rate. In the second leg, rupee funds must be returned along with the applicable swap premium.

The ECB and Overseas Foreign Currency Borrowings (OFCB) swap facility became operational on June 8 and will remain available until January 15, 2027.

The facility will cover eligible ECB drawdowns and OFCB inflows received up to December 31, 2026.

Relief on Net Open Position Calculation

The RBI also clarified the treatment of positions arising from these special facilities.
According to the notification, banks will not be required to include positions arising from the FCNR(B), ECB and OFCB swap schemes while calculating their Net Open Position in Indian Rupee (NOP-INR) limits.

The clarification simplifies the regulatory treatment of these transactions and provides operational flexibility for participating banks.

The latest guidelines operationalise the RBI’s measures announced to encourage foreign currency inflows through FCNR(B) deposits, ECBs and overseas borrowings, while providing a defined framework for banks and eligible entities to access the swap facilities.