The Reserve Bank of India (RBI) reported that a total of $136.38 billion flowed into the country’s foreign‑exchange (forex) pool during August, the largest single‑month mobilisation on record. The inflow, channelled through a special foreign‑currency swap facility, is expected to bolster the rupee’s defence amid heightened global market volatility.
Swap facility drives massive inflows
The RBI’s foreign‑currency swap window, opened to non‑resident Indians (NRIs) and foreign investors, allows participants to park foreign‑currency deposits in the RBI in exchange for Indian‑rupee funding. The scheme has been a key conduit for diaspora capital, with the FCNR(B) – Foreign Currency Non‑Resident (Bank) – account accounting for the overwhelming majority of the intake.
"FCNR(B) deposits account for 93% of the total inflows under the swap facility," the RBI said in its August 31 report.
Data compiled by multiple financial outlets show that more than $100 billion of the total came from FCNR(B) deposits, a figure that surpasses the RBI’s own estimate of $80 billion for the month. This concentration reflects a strong appetite among the Indian diaspora to invest in safe‑haven assets linked to the Indian economy.
Bank participation and sectoral breakdown
Among the banks, ICICI Bank emerged as a leading conduit, mobilising approximately $17.9 billion under the scheme, according to Reuters. Other Indian banks collectively raised the balance, bringing the aggregate to the record $136.38 billion figure cited by the RBI.
While most outlets align on the total amount, some reports – notably TradingView and Business Today – highlighted a figure of $127 billion specifically attributed to the FCNR(B) window, suggesting a narrower definition of the inflow source. The discrepancy appears to stem from whether the $9‑billion difference is classified under ancillary foreign‑currency deposits outside the FCNR(B) category.
RBI Governor Shaktikanta Das has repeatedly underscored the importance of such inflows for “defending the rupee and sustaining external stability.” The surge comes at a time when the Indian currency has faced pressure from a stronger US dollar and tightening global liquidity, making foreign‑exchange reserves a critical buffer.
With the added $136.38 billion, India’s total foreign‑exchange reserves have climbed to a record high, reinforcing the country’s capacity to meet external obligations and support import financing. Analysts from Bloomberg and the Economic Times note that the unprecedented level of diaspora participation signals confidence in India’s long‑term growth prospects, even as investors remain cautious about the broader macro‑economic environment.
Looking ahead, the RBI is expected to keep the swap facility open for the remainder of the fiscal year, encouraging further participation from NRIs and foreign investors. Market watchers will monitor whether the inflow momentum can be sustained, especially as global interest‑rate dynamics evolve and the rupee continues to navigate external shocks.
