RBI introduces US dollar-rupee forex swap facility to attract foreign capital inflows
With an aim to attract foreign capital inflows, the Reserve Bank of India (RBI) has introduced a US dollar-rupee forex swap facility for fresh FCNR (B) deposits mobilised by banks for a minimum tenor of three years and a maximum of five years.
Foreign Currency Non-Resident (Bank) deposits are foreign currency term deposits maintained by non-resident Indians (NRIs). The RBI stated that under the swap arrangement, a bank can sell US Dollars in multiples of $1 million to the RBI and simultaneously agree to buy the same amount of US dollars at the end of the swap period.
The swap facility will be available to the AD Category I banks for newly mobilized FCNR (B) deposits in any freely convertible currency, including deposits that are renewed upon maturity, for a minimum tenor of 3 years and a maximum tenor of 5 years. However, it stated the swap facility with RBI will be available only in US dollars.
