The Reserve Bank of India launched a facility in June 2026 to attract foreign-currency deposits, with an initial target of 80 billion dollars. The scheme attracted between 128 and 136 billion dollars, creating a liquidity surplus estimated between 9.7 and 15 trillion rupees in India’s banking system. The RBI closed the facility early on August 31, 2026, and is now using USD/INR foreign exchange swaps to absorb the excess liquidity, with operations estimated at around 700 million dollars maturing in September and October 2026. Indian banks have expressed a preference for these swaps over a cash reserve ratio hike, which would be more costly to their margins.
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