India’s central bank has attracted $72.85 billion in foreign-currency inflows through a special swap facility introduced to strengthen dollar liquidity, support the rupee and protect the country’s financial system from rising oil prices and global market volatility.
Foreign-currency deposits dominate inflows
Data published by the Reserve Bank of India showed that foreign-currency deposits from non-resident Indians accounted for $65.4 billion of the total collected by 21 August. Overseas foreign-currency borrowing by Indian banks contributed another $4.86 billion, while external commercial borrowing generated $2.59 billion.
The facility was launched on 8 June, allowing banks and companies to exchange eligible dollar inflows for rupees through the central bank at favourable terms. The measure reduces the cost of protecting those funds against currency movements and encourages institutions to bring more foreign exchange into India.
The window for foreign-currency non-resident deposits will close on 31 August. However, the sections covering external commercial borrowing and overseas borrowing by Indian banks will remain available until 31 December.
Banks accelerate international fundraising
Indian lenders have responded by increasing their activity in international debt markets. ICICI Bank, the country’s second-largest private lender, has doubled its approved overseas borrowing limit to $5 billion.
The bank has already raised $2.05 billion in dollar-denominated debt during the past month, more than any other Indian lender since the RBI announced the swap programme. Its fundraising included a recent $750 million issue of five-year dollar bonds, representing its third international debt transaction within a month.
Private and state-owned banks are expected to raise billions of dollars through additional bonds and syndicated loans. The strength of demand suggests that international investors remain willing to provide capital to large Indian institutions despite geopolitical uncertainty and higher global borrowing costs.
Oil prices place pressure on the rupee
The programme comes as India faces renewed pressure from expensive energy imports. The country purchases most of its crude oil from overseas, meaning higher oil prices increase demand for dollars and can weaken the rupee.
The currency ended Friday at approximately 95.69 rupees to the US dollar and lost about 0.3 per cent during the week. Oil prices rose by more than 5 per cent amid concerns about supply disruptions connected to conflict in the Middle East.
The RBI has also intervened directly in the foreign-exchange market, helping prevent the rupee from falling beyond the closely watched level of 96 to the dollar. The additional foreign-currency inflows give the central bank a larger buffer with which to manage disorderly movements.
A strong buffer with future costs
The $72.85 billion raised demonstrates the effectiveness of offering banks an attractive route for bringing foreign currency into India. It could strengthen market confidence, improve dollar availability and reduce immediate pressure on the rupee.
However, the inflows are not equivalent to permanent foreign investment. Deposits and borrowings must eventually be repaid, while the central bank assumes obligations through the swap arrangements. Banks must also manage refinancing risks if global interest rates remain elevated.
India has therefore gained valuable short-term protection rather than a complete solution. The durability of that protection will depend on oil prices, capital flows and whether the country can continue attracting dollars after the special incentives expire.
Newshub Editorial in Asia – 23 August 2026
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