RBI uses currency swaps to absorb ₹11 trillion banks' surplus

Business Sep 09, 2026

India's banks are swimming in extra cash, about 11 trillion rupees ($115 billion), thanks to recent RBI moves.

To keep things balanced, the RBI is using a tool called currency swaps: selling US dollars for rupees now and buying them back later.

This helps soak up some of that surplus money and keeps the system running smoothly.

Banks' cheap borrowing could raise inflation

With all this extra cash, banks can borrow more cheaply, which sounds nice but can lead to higher prices (inflation).

The RBI's swaps have already nudged up dollar-rupee forward rates, and traders are watching closely as some of these deals wrap up in October.

The central bank hasn't commented yet, but its actions are all about keeping inflation (and your future expenses) in check.