In a remarkable financial move, the Reserve Bank of India (RBI) has successfully attracted close to $10 billion through its recent foreign currency deposit initiative. This influx could potentially reach up to $40 billion, providing a significant cushion for the Indian rupee.

On June 5, 2026, the RBI unveiled its Foreign Currency Non-Resident (Banks) swap facility, commonly referred to as FCNR(B). This innovative scheme allows Indian banks to tap into foreign currency deposits from non-resident Indians. Banks can then exchange these deposits for rupees, with the RBI covering the associated hedging costs. Moreover, the central bank has exempted these deposits from certain statutory liquidity requirements, making the initiative even more appealing.

In response, Indian banks have ramped up the FCNR(B) interest rates to unprecedented levels, now exceeding 7%. This rate surge positions these deposits as a compelling alternative for NRIs, especially compared to options available in Gulf countries and other regions with sizable Indian populations. By early July, banks had already secured nearly $5 billion in deposits, contributing to an impressive total approaching the $10 billion mark.

The 2013 Playbook Revisited

This isn't the first time the RBI has executed a strategy like this. Back in 2013, the central bank mobilized between $27 billion and $34 billion in foreign currency deposits using a similar approach, which played a key role in stabilizing the rupee and rebuilding reserves. Current projections suggest that inflows specific to the FCNR initiative could reach $10 to $20 billion, pushing total inflows from all related measures to potentially hit the $30 to $40 billion range in the coming months.

Following the announcement, the rupee gained strength, appreciating by 0.6% to 95.24 against the dollar. The RBI's decision to extend the timeline for realizing export proceeds is part of a broader strategy to enhance India's external position amid rising oil prices and ongoing capital outflows. As seen in recent developments, such as the Chinese central bank's liquidity support, central banks are actively seeking solutions to bolster their economies.

This article is for informational purposes only and does not constitute financial advice.