Indian Banks Mobilize $20.7 Billion Under RBI's Special Forex Incentive Window

Mumbai: Indian banks have mobilised $20.7 billion under the special incentive window offered by the Reserve Bank of India to attract foreign currency inflows. Of this, $17.4 billion came through FCNR(B) deposits — by far the largest contributor — while overseas foreign currency borrowings (OFCBs) and external commercial borrowings (ECBs) added $2.0 billion and $1.3 billion, respectively.

The facility, announced on June 5, 2026 and operationalised on June 8, offers concessional swaps to incentivise capital inflows and support the balance of payments. It remains open for FCNR(B) deposits till September 30, 2026, and for OFCBs and ECBs till December 31, 2026.

ET, in its edition dated July 17, had reported that State Bank of India (SBI) mobilised about $1.9 billion in foreign currency, while Bank of Baroda (BoB) ranked a distant second, having raised $273 million so far. Canara Bank and Punjab National Bank (PNB) mobilised $80 million each.

Separately, RBL Bank said it has raised $150 million through the FCNR(B) scheme, South Indian Bank raised $50 million, and Central Bank of India raised $8.40 million through FCNR(B) deposits. No private sector bank has disclosed its numbers so far, though all remain confident of raising deposits.

"We have partnered with various parties to provide leverage and are committed to making this initiative a success," ICICI Bank Executive Director Sandeep Batra said in a post-earnings media call. "We will offer leverage based on the customer profile and on what our partners are providing; customers will get a reasonable return."

Axis Bank Managing Director and CEO Amitabh Chaudhry said the FCNR-B deposit scheme is drawing strong interest from non-resident Indians (NRIs), and the bank sees a "meaningful opportunity" to grow its deposit base through its NRI franchise and tie-ups with overseas banks.

Meanwhile, Ashok Vaswani of Kotak Mahindra Bank said the lender is seeing strong demand from NRIs but is still building out the funding and partnership ecosystem before scaling up the product. "FCNR is something we are quite excited about. Clearly, there is a lot of customer demand from NRIs. The question we are really grappling with is how much supply we can build up to provide leverage," he said.

Federal Bank, which receives a large share of remittances from the Middle East, struck a similarly measured tone. "We think we will get a fair share of the market on that. But these are still very early days," said KVS Manian, MD & CEO. "Over the next quarter, we will be able to give a better sense of that. But I think we hold a decent market share in that corridor, and we will get our fair share."

"This will, of course, be more focused on the Middle East, and to some extent Singapore and Hong Kong. There are reasons why Australia, the US and the UK are less favourable for this product from a tax standpoint. So we've seen more interest from geographies like the Middle East, Singapore and Hong Kong," he added.

RBL Bank has so far raised $150 million through the FCNR(B) scheme, said MD & CEO R Subramaniakumar. "We will of course tap our partner banks and NRIs in the Middle East, but it will become clearer as time passes. This is a logical opportunity for us, and we will formulate a strategy to raise deposits through the wider NRI ecosystem," he said.