RBI's special dollar swap window draws $136 billion by 31 August

Background

An FCNR(B) deposit is a bank deposit held in a foreign currency by a non-resident Indian. The bank owes those dollars back to the depositor later. Under the 2026 facility the bank sold the dollars to the RBI for rupees. The bank will buy the same dollars back at the same exchange rate when the swap ends. Eligible deposits run for three to five years, with a one-year lock-in. Such deposits were also freed from the cash reserve ratio and the statutory liquidity ratio. The RBI ran a similar window in 2013 under Governor Raghuram Rajan. The 2013 windows brought in about $34 billion between September and November 2013.

How it developed

1. 5 June to 8 June 2026
   How it started

   RBI announced the swap facility on 5 June 2026 to attract dollars

   RBI Governor Sanjay Malhotra announced the measures on 5 June 2026. The Governor cited the West Asia conflict and high energy prices. Net foreign portfolio outflows had reached $13.7 billion since 1 April 2026. The RBI offered to bear the full hedging cost on fresh three-to-five-year FCNR(B) deposits. The RBI also offered a concessional swap for external commercial borrowings by public sector units. The facility opened on 8 June 2026. The FCNR(B) window was to run until 30 September 2026. The RBI used the same tool in September 2013 under Governor Raghuram Rajan. The 2013 swap cost banks a fixed 3.5 per cent a year. The 2013 windows raised about $34 billion by 30 November.

   Reserve Bank of IndiaPTIBusiness Standard
2. 14 August 2026
   New fact

   RBI closes the FCNR(B) window a month early, on 31 August

   On 14 August 2026 the RBI moved the FCNR(B) deadline from 30 September to 31 August 2026. The RBI cited the encouraging response and the resulting forex inflows. Inflows had reached $56.85 billion by 13 August. FCNR(B) deposits made up $52.3 billion of that total. Banks got until 11 September 2026 to complete swaps on eligible deposits. Nine days earlier Governor Malhotra had said there was no proposal to close the scheme early.

   Reserve Bank of IndiaBusiness StandardBusiness Today
3. 31 August to 1 September 2026
   Consequence

   Window shuts on 31 August as liquidity hits a four-year high

   The FCNR(B) window closed on 31 August 2026. The liquidity surplus in the banking system reached Rs 6.65 trillion on 31 August. Business Standard called the surplus the highest since 19 April 2022. On 1 September the RBI offered to absorb Rs 10 trillion through two reverse repo auctions. Banks parked only Rs 3.74 trillion. The rupee closed at 94.95 to the dollar on 1 September, a two-month high.

   Reserve Bank of IndiaIANSBusiness Standard
4. 2 September 2026
   New fact

   RBI counts $127.23 billion from FCNR(B) deposits, $136.38 billion in all

   The RBI released the full tally on 2 September 2026. Banks raised $127.23 billion through FCNR(B) deposits by 31 August. Borrowings added $9.15 billion, taking the total to $136.38 billion. Inflows had stood at only $72.85 billion on 21 August. Business Standard said the market had expected $90-100 billion. ICICI Bank alone raised $17.88 billion.

   Reserve Bank of IndiaIANSBusiness Standard
5. 2 September 2026
   Consequence

   Liquidity surplus tops Rs 7.75 trillion, call rate falls to 5.02 per cent

   The liquidity surplus rose to Rs 7.76 trillion on 1 September 2026. On 2 September the RBI offered to absorb Rs 5 trillion through an overnight reverse repo auction. Banks offered Rs 4.6 trillion. The weighted average call rate settled at 5.02 per cent, down from 5.16 per cent. The call rate is now close to the standing deposit facility rate of 5 per cent. The RBI announced another Rs 6 trillion auction for 3 September.

   Reserve Bank of IndiaBusiness Standard
6. 2 September 2026, night
   New fact

   GIFT City banks sanctioned $54 billion under the swap facility

   Banks at GIFT City in Gujarat took a large share of the swap money. The International Financial Services Centres Authority (IFSCA) released the figures on 2 September 2026. Twenty international banking units at GIFT-IFSC sanctioned $54.02 billion under the facility by 31 August. The units disbursed $52.82 billion. Sanctions stood at $28.60 billion on 14 August and $37.26 billion on 21 August. The units raised the money in the United Kingdom, the United States, Mexico, West Asia, Hong Kong, Singapore and Africa. The facility for external commercial borrowings and overseas borrowings stays open until 31 December 2026.

   Business Standard
7. 3 September 2026, morning
   Consequence

   Rupee rises to 94.27, its strongest since June, on the inflows

   On 3 September 2026, the rupee opened 69 paise stronger at 94.29 to the dollar. The rupee touched 94.27 in morning trade. That is the strongest level since 29 June 2026. The rupee had closed at 94.98 on 2 September. Dealers credited the dollar inflows under the swap facility. The inflows were well above the $80 billion to $90 billion economists had expected. The larger reserves give the Reserve Bank of India more room to steady the rupee. A treasury adviser said the RBI can now cover its short-term dollar positions from these deposits.

   Business Standard
8. 3 September 2026, close of trade
   Consequence

   Rupee closes at 94.49. Liquidity surplus hits a record Rs 9.7 trillion.

   The rupee closed at 94.49 to the dollar on 3 September 2026, up 49 paise. The close is the strongest since 25 June 2026. Dealers said the RBI also sold dollars to steady the rupee. RBI data showed a record liquidity surplus of Rs 9.70 trillion on 2 September. The previous high was Rs 9.2 trillion in September 2021. The call rate fell to 4.95 per cent, below the 5 per cent standing deposit facility rate. Banks parked Rs 5.53 trillion in two RBI reverse repo auctions on 3 September.

   Reserve Bank of IndiaReutersBusiness Standard
9. 4 September 2026
   Consequence

   Banks park ₹6.02 trillion in two three-day RBI auctions

   RBI held two three-day variable rate reverse repo auctions on 4 September 2026. Banks placed ₹5,41,975 crore in the first auction. Banks placed ₹60,419 crore in the second auction. Both auctions cleared at 5.24 per cent. The combined absorption was ₹6,02,394 crore. RBI data put net liquidity absorption at ₹10,31,465.50 crore on 3 September. The overnight call rate was 4.95 per cent.

   Reserve Bank of IndiaBusiness Standard
10. Announced 4 September 2026
    Official response

    RBI announces a ₹7 trillion, 30-day liquidity absorption operation

    RBI announced a 30-day variable rate reverse repo operation on 4 September 2026. The notified amount is ₹7,00,000 crore. Bidding will take place on 7 September. The operation will reverse on 7 October 2026. Banks may request an early reversal under RBI's stated conditions. The longer operation can absorb surplus funds beyond overnight and three-day auctions.

    Reserve Bank of India
11. Week ended 28 August; released 4 September 2026
    Consequence

    Forex reserves rise $11.475 billion to a record $740.803 billion

    India's foreign exchange reserves reached $740.803 billion in the week ended 28 August 2026. The reserves rose by $11.475 billion during the week. Foreign currency assets rose by $9.337 billion to $600.670 billion. Gold reserves rose by $2.191 billion to $116.409 billion. Special drawing rights fell by $43 million to $18.810 billion. India's reserve position in the IMF fell by $11 million to $4.914 billion. Dollar values also reflect movements in non-US reserve currencies.

    Reserve Bank of IndiaAkashvani NewsBusiness Standard
12. 4 September 2026, evening
    Consequence

    Dealers see higher odds of a rate rise at the October policy

    RBI's 30-day reverse repo operation will reverse on 7 October 2026. The Monetary Policy Committee meets from 5 to 7 October 2026. Business Standard reported on 4 September 2026 that the chances of an October rate rise have increased. A rise would be the first of this cycle. A private bank's treasury head said a rate rise 'now seems like the most preferable tool for the RBI'. Dealers said the early-reversal option suggests no further liquidity steps before the policy meeting. Bank of Baroda chief economist Madan Sabnavis expects more swap inflows until 11 September 2026. Sabnavis expects foreign currency assets to reach about $640-650 billion.

    Reserve Bank of IndiaBusiness Standard
13. 4 September 2026, evening
    Consequence

    Banks expect funding costs to fall by up to 50 basis points

    Senior bank officials spoke to Business Standard on 4 September 2026. The officials expect surplus liquidity to cut banks' cost of funds by up to 50 basis points. A certificate of deposit is a short-term instrument banks use to borrow money. Prime Database data show banks raised ₹68,130 crore through certificates of deposit in August 2026. August's total was the lowest since April 2026. The three-month certificate of deposit rate was 7.16 per cent on 8 June 2026. The rate fell to 5.86 per cent on 3 September 2026. Brokerage Jefferies expects banks to lower wholesale funding rates.

    Business StandardBusiness Today
14. 7 September 2026; auction results
    New fact

    Banks park ₹2,59,276 crore in RBI’s 30-day auction

    RBI accepted ₹2,59,276 crore in its 30-day reverse repo auction on 7 September 2026, against ₹7,00,000 crore offered. An overnight auction accepted ₹3,53,390 crore against ₹5,00,000 crore offered. Both cleared at 5.24%. These operations absorb spare bank money for different periods. Business Standard reported an e-Kuber problem, citing market participants. RBI had not commented on that reported problem at the newspaper’s press time.

    Reserve Bank of IndiaReserve Bank of IndiaBusiness Standard

Key terms