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RBI introduces US Dollar-Rupee Forex Swap Facility for External Commercial Borrowings (ECBs) and Overseas Foreign Currency Borrowings
The Reserve Bank of India (RBI) has introduced a US Dollar–Rupee Forex Swap Facility (Swap Facility) to provide currency hedging support to eligible borrowers raising long-term external financing. The Swap Facility is available for:
- ECB of average maturity of three years and above, drawn down by eligible Public Sector Undertakings (PSUs) between 8 June 2026 to 31 December 2026; and
- Overseas Foreign Currency Borrowings (OFCBs) raised by Authorized Dealer (AD) Category-I banks with a minimum maturity of three years.
The key features of the Swap Facility are as below:
- Eligible currencies: While the underlying ECB or OFCB may be raised in any currency, the swap with RBI is conducted only in US Dollars.
- Tenor: The maximum swap tenor is coterminous with the repayment schedule or maturity of the ECB/OFCB, subject to a ceiling of five years.
- Mechanics and pricing: Under the swap, banks sell US Dollars to RBI at the FBIL[1] reference rate (spot basis) and simultaneously agree to buy back the same amount at maturity. The swap is undertaken in multiples of USD 1 million at a fixed rate of 1.5% per annum (compounded semi-annually). In the reverse leg, banks return INR funds along with the swap premium to receive the US Dollars back.
- Operational framework:
- The facility is available on all working days in Mumbai (excluding Saturdays and holidays).
- In any week, the eligible swap amount is capped at the equivalent ECB/OFCB inflows received in the preceding week(s)
- Banks are required to submit a declaration confirming that the facility is being used to hedge eligible ECB/OFCB flows.
- No International Swaps and Derivatives Association (ISDA) agreement (i.e., standard derivatives contract) with RBI is required.
[1] The FBIL (Financial Benchmarks India Private Limited) Reference Rate is the official daily benchmark exchange rate for the Indian Rupee (INR) against major global currencies. It is used extensively by banks, corporations and the Reserve Bank of India (RBI) for financial contracts and forex valuations.
Source: RBI Circular No. RBI/2026-27/100 FMOD.MAOG.No.S-57/01.06.016/2026-27 dated 8 June 2026