RBI rolled out a concessional dollar‑rupee swap facility on 1 June 2026 to bolster liquidity for private banks. The scheme, which offers a 0.5% discount on the exchange rate, allows banks to convert FCNR(B) deposits into rupees and reinvest the proceeds overseas.
HDFC Bank led the uptake, mobilising $11.5 bn of FCNR(B) deposits, of which $5.7 bn were channelled into overseas loans and $3.1 bn into standby letters of credit. Axis Bank followed with $4.3 bn, Kotak with $4.4 bn, while IDFC First Bank and Yes Bank mobilised $2.5 bn and $1.8 bn respectively.
The influx lifted HDFC’s headline advance growth to 18.8% and deposit growth to 18.8% in FY27 Q2, compared to 16.3% and 16.3% when FCNR-linked figures were excluded. Axis Bank’s advances rose 22.7% but fell to 18.8% after removing Rs 43,800 crore of FCNR-linked loans, and Kotak’s deposits grew 23.2% versus 12.7% once FCNR(B) deposits were excluded.
RBI’s chief statistical officer, Dr. S. Kumar, said the program had attracted unprecedented outflows, helping banks maintain a robust balance sheet amid global market volatility. He added that the scheme was part of a broader strategy to keep domestic credit growth steady.
A Mumbai branch manager for HDFC Bank told reporters that the extra liquidity enabled faster loan approvals for local traders, reducing the usual 10‑day processing time to just 4 days. He added that the move would help small businesses cope with the post‑pandemic recovery.
Analysts expect RBI to extend the swap facility for another quarter, pending a review in September 2026. The bank’s Q2 performance will likely inform the central bank’s decision on the scheme’s future.