RBI Directs Banks to Report Daily FCNR(B), ECB and Overseas Borrowings Under New Swap Window

The Reserve Bank of India (RBI) has instructed all authorised dealer category-I banks to submit daily reports on Foreign Currency Non-Resident (Bank) [FCNR(B)] deposits, External Commercial Borrowings (ECBs), and Overseas Foreign Currency Borrowings (OFCBs) mobilised under the special concessional swap facilities announced earlier this month.

The move comes as part of the central bank's efforts to closely monitor foreign currency inflows and assess the effectiveness of the measures introduced to attract overseas funds and strengthen India's foreign exchange reserves.

Daily Reporting Mandatory From June 22

According to the RBI's latest circular, banks will be required to furnish detailed information on a daily basis by 6:00 PM. The reporting requirement applies even on days when no transactions take place, with banks mandated to submit a "nil" statement. The only exceptions are Saturdays and official bank holidays.

The central bank has further directed lenders to include details of all eligible FCNR(B) deposits, ECBs, and OFCBs mobilised since June 8—the date on which the swap facility was announced—in their first submission scheduled for June 22.

Banks must provide the information in prescribed reporting formats and send the data separately to designated RBI email addresses for monitoring and analysis.

RBI's Strategy to Attract Foreign Currency Inflows

The reporting requirement is linked to a series of measures unveiled by the RBI to encourage banks to mobilise foreign currency deposits and overseas borrowings.

On June 8, the RBI introduced a special US dollar-rupee swap facility for fresh FCNR(B) deposits with maturities ranging from three to five years. The facility allows authorised dealer banks to swap foreign currency funds mobilised from non-resident Indians with the RBI at concessional rates.

Although FCNR(B) deposits can be accepted in any freely convertible foreign currency, the swap arrangement with the RBI will be conducted exclusively in US dollars.

The objective behind the move is to make FCNR(B) deposits more attractive for banks and overseas investors while supporting India's foreign exchange reserves and improving foreign currency liquidity in the banking system.

Exemption From CRR and SLR Requirements

In a separate notification, the RBI announced regulatory relief for banks mobilising fresh Non-Resident External (NRE) term deposits.

The central bank stated that fresh NRE term deposits with maturities of three years or more, including renewed deposits, mobilised between June 19 and September 30, will be exempt from maintaining Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) requirements.

This exemption is expected to lower the cost of raising overseas deposits for banks and encourage them to attract more funds from non-resident Indians.

The exemption will remain applicable to the original amount of the deposit for as long as the funds stay on the books of the bank. However, the RBI clarified that transfers from Non-Resident Ordinary (NRO) accounts to NRE accounts will not qualify for this benefit.

What Are FCNR(B) Deposits?

FCNR(B) deposits are fixed deposits maintained by Non-Resident Indians (NRIs) in foreign currencies such as US Dollars, British Pounds, Euros, Japanese Yen, Australian Dollars, and Canadian Dollars.

These deposits help NRIs earn interest without being exposed to currency exchange risks, as both the principal and interest are repaid in the same foreign currency in which the deposit was made.

For banks, FCNR(B) deposits represent an important source of foreign currency funding.

Why the RBI Is Taking This Step

Market experts believe the RBI's latest measures are aimed at boosting foreign currency inflows at a time when global financial markets remain volatile and capital flows continue to fluctuate.

By offering swap facilities and regulatory exemptions, the central bank is incentivising banks to attract more overseas deposits and borrowings, thereby strengthening India's external sector position.

The daily reporting mechanism will allow the RBI to closely track the response from banks and measure the effectiveness of the policy in real time.

Impact on Banks and NRIs

For banks, the concessional swap facility and CRR/SLR exemptions can significantly reduce funding costs and improve profitability on foreign currency deposits.

For NRIs, the measures may lead to more attractive deposit rates and additional investment opportunities through Indian banks.

Industry observers expect banks to launch special FCNR(B) and NRE deposit campaigns over the coming months to capitalise on the RBI's temporary incentives, which remain available until September 30.

Outlook

The RBI's latest directives highlight its proactive approach toward managing foreign currency liquidity and attracting overseas capital. As banks begin reporting daily inflows and actively market FCNR(B) and NRE deposit products, the coming months will reveal how successful these initiatives are in boosting foreign exchange inflows and supporting India's financial stability.