RBI launched USD-INR forex swap facility for fresh FCNR(B) deposits to attract foreign capital. Banks can mobilize deposits for 3-5 years tenor, swap USD multiples of $1 million with RBI. Available to AD Category I banks for deposits in any freely convertible currency, but swaps only in USD. One-year lock-in period applies. Part of broader measures including ECB and OFCB swap facilities for PSUs and banks respectively.

This facility addresses India's external financing pressures by incentivizing NRI deposits through currency risk mitigation. Banks traditionally hesitate mobilizing long-term FCNR deposits due to USD-INR volatility exposure. The swap mechanism allows banks to eliminate forex risk - they collect foreign currency deposits from NRIs, immediately swap to rupees with RBI, and get guaranteed USD rates for maturity conversion. This creates win-win: NRIs get attractive deposit rates, banks avoid currency risk, RBI builds forex reserves. The $1 million minimum ensures institutional scale while 3-5 year tenor provides stable long-term funding. Lock-in period prevents speculative flows. Extends beyond FCNR to ECB/OFCB swaps, signaling comprehensive strategy to strengthen external account amid global monetary tightening. Critical for maintaining adequate import cover and currency stability during volatile periods.