RBI launches concessional swaps for PSUs to boost forex reserves
The Reserve Bank of India (RBI) just rolled out concessional currency swap facilities to help boost the country's foreign exchange reserves.
The idea is to make fundraising smoother for public sector undertakings (PSUs) and encourage more foreign currency nonresident (FCNR-B) deposits.
Now, banks can accept deposits in any freely convertible currency, which could make things more flexible for both banks and depositors.
US dollar swaps at 1.5%
These swap facilities are only for US dollars and apply to deposits raised until September 30, 2026.
There's a one-year lock-in period, so swaps can't be canceled right away.
PSUs can also use external commercial borrowings (ECBs) with at least a three-year maturity for these swaps.
The rate is fixed at 1.5% a year, compounded semiannually, and the window stays open until January 15, 2027, for eligible ECB drawdowns.
RBI eases banks' rupee exposure calculation
To help banks manage their foreign exchange exposure better, RBI is letting them exclude swap positions from FCNR-B deposits and ECBs when calculating their net open rupee positions.
This should make handling risks a bit less stressful while enjoying the benefits of these new swap options.