FCNR(B) inflows may top $80 billion despite early RBI swap window closure
Synopsis
Despite the RBI pulling forward its zero-cost hedging swap window closure by a full month, FCNR(B) inflows are now forecast to cross $80 billion — up from an earlier $70 billion estimate — with $52.3 billion already received between June and mid-August. The upgrade by BofA Securities signals non-resident confidence in India's external sector is running hotter than policymakers anticipated.
Key Takeaways
BofA Securities has revised its FCNR(B) inflow forecast upward from $70 billion to more than $80 billion .
The RBI advanced the closure of its zero-cost hedging swap window to 31 August from the original 30 September deadline.
Banks received $52.3 billion through FCNR(B) deposits between 8 June and 13 August .
An additional $1.7 billion came via external commercial borrowing swaps and $2.8 billion through overseas foreign currency borrowings in the same period.
India's current account posted a deficit of $3.1 billion ( 0.3% of GDP ) in April–June 2025 , driven by a wider merchandise trade gap.
Foreign currency inflows are expected to support India's balance of payments even as the current account remains in deficit.
Foreign currency inflows through FCNR(B) deposits are now projected to exceed $80 billion, even as the Reserve Bank of India (RBI) advanced the closure of its zero-cost hedging swap window ahead of schedule, following stronger-than-expected inflows, according to a report by Bank of America (BofA) Securities.
Revised Projections
BofA Securities has upgraded its earlier estimate of up to $70 billion in FCNR(B) inflows to more than $80 billion, citing robust uptake since the facility was introduced. 'We revise this up to the $80 billion+ given stronger flows,' the brokerage noted in its report.
The brokerage acknowledged that the earlier-than-anticipated closure of the facility — moved to 31 August from the original 30 September deadline — means total inflows will fall short of what could have been achieved had the window run its full course. Nevertheless, BofA maintained that the revised estimate carries meaningful upside relative to its previous forecast.
Inflows So Far
Between 8 June and 13 August, banks received $52.3 billion through FCNR(B) deposits alone. Beyond that, the RBI collected an additional $1.7 billion through swap facilities for external commercial borrowings and $2.8 billion through overseas foreign currency borrowings by authorised lenders during the same period.
Balance of Payments Support
According to BofA, the surge in foreign currency inflows is expected to provide meaningful support to India's balance of payments position. This comes even as the country's current account slipped into a deficit of $3.1 billion, or 0.3 per cent of GDP, in the April–June 2025 quarter.
The brokerage attributed the current account deficit primarily to a wider merchandise trade gap, which was partly offset by stronger services exports and remittances. Notably, BofA expects the current account deficit to remain moderate in the second quarter, with scope for further narrowing if goods exports improve or remittance inflows stay strong.
What This Means for India's External Position
The scale of FCNR(B) inflows — even with the swap window shutting a month early — underscores sustained non-resident investor confidence in India's external sector. The RBI's decision to advance the closure suggests the central bank was satisfied with the volume of foreign currency mobilised and may have been wary of overshooting its own liquidity management targets. How the inflows are deployed and whether they translate into durable reserve accretion will be closely watched by markets in the weeks ahead.
Point of View
But it also caps inflows that could have further cushioned the balance of payments. With India's current account already in deficit and merchandise trade widening, the timing of the closure warrants scrutiny. BofA's upward revision to $80 billion+ is encouraging, yet the gap between what was achieved and what could have been achieved had the window run to September is a real opportunity cost. The broader question — whether FCNR(B) inflows translate into durable reserve strength or merely smooth a temporary external financing need — will define the RBI's next moves on rupee management.
NationPress
17 Aug 2026
Frequently Asked Questions
What are FCNR(B) deposits and why do they matter?
FCNR(B), or Foreign Currency Non-Resident (Bank) deposits, are fixed-term deposits held by non-resident Indians in foreign currencies with Indian banks. They matter because large inflows bolster India's foreign exchange reserves and support the balance of payments, particularly when the current account is in deficit.
Why did the RBI close its swap window early?
The RBI advanced the closure of its zero-cost hedging swap window for FCNR(B) deposits to 31 August from the original 30 September deadline, following stronger-than-expected inflows. The early closure suggests the central bank was satisfied with the volume of foreign currency mobilised.
How much has India received through FCNR(B) deposits so far?
Between 8 June and 13 August, banks received $52.3 billion through FCNR(B) deposits. An additional $1.7 billion came via external commercial borrowing swap facilities and $2.8 billion through overseas foreign currency borrowings by authorised lenders in the same period.
What is India's current account deficit for April–June 2025?
India's current account posted a deficit of $3.1 billion, or 0.3 per cent of GDP, in the April–June 2025 quarter. BofA attributed this to a wider merchandise trade deficit, partly offset by stronger services exports and remittances.
Will the current account deficit worsen in the coming quarters?
BofA Securities expects the current account deficit to remain moderate in the second quarter. The brokerage noted the deficit could narrow further if goods exports improve or remittance inflows stay strong.
