Circular no. RBI/2026-27/100 FMOD.MAOG.No.S-57/01.06.016/2026-27, Dated, 08-06-2026
The Reserve Bank of India (RBI) has introduced a US Dollar–Rupee Forex Swap Facility to facilitate foreign currency borrowings by Public Sector Undertakings (PSUs) and Authorised Dealer (AD) Category-I banks.
The facility is designed to support eligible External Commercial Borrowings (ECBs) and Overseas Foreign Currency Borrowings (OFCBs) by providing an avenue for managing foreign exchange risk and enhancing access to overseas funding.
1. Facility Available for Eligible PSU ECBs
Under the new framework, the swap facility will be available for:
- External Commercial Borrowings (ECBs) raised by Public Sector Undertakings (PSUs); and
- ECBs having an average maturity of three years or more.
Eligible PSU borrowers will be able to access the facility through their designated AD Category-I banks.
2. Coverage Extended to Overseas Foreign Currency Borrowings by Banks
The RBI has also extended the facility to:
- Overseas Foreign Currency Borrowings (OFCBs) raised by AD Category-I banks; and
- OFCBs having a minimum maturity period of three years.
This will enable banks to access foreign-currency funding while mitigating associated exchange-rate risks through the swap mechanism.
3. Access Through AD Category-I Banks
The Forex Swap Facility shall be operationalised through AD Category-I banks.
Accordingly:
- PSU borrowers raising eligible ECBs may avail the swap facility through AD Category-I banks; and
- Eligible OFCBs raised by AD Category-I banks may also be covered under the facility.
4. Objective of the Swap Facility
The introduction of the US Dollar–Rupee swap mechanism is intended to:
- Facilitate overseas fundraising by PSUs and banks
- Provide a structured avenue for managing foreign exchange exposure
- Enhance stability in foreign currency borrowing programmes
- Improve access to long-term overseas financing; and
- Support efficient liquidity and funding management.
5. Eligibility Conditions
The facility applies to:
For PSU Borrowers
- External Commercial Borrowings (ECBs);
- Average maturity of three years or more.
For AD Category-I Banks
- Overseas Foreign Currency Borrowings (OFCBs);
- Minimum maturity of three years.
Only borrowings satisfying the prescribed maturity requirements will be eligible under the scheme.
6. Significance of the Measure
The Forex Swap Facility provides an additional risk-management tool for entities accessing overseas debt markets. By enabling eligible borrowers to swap foreign currency exposures into rupee obligations, the facility may help reduce currency volatility risks and improve the predictability of borrowing costs.
7. Objective of the RBI Initiative
The RBI’s initiative seeks to support long-term foreign currency borrowings by PSUs and banks while strengthening the framework for exchange risk management. The facility is expected to facilitate smoother access to international capital markets and contribute to efficient management of external funding requirements.
Click Here To Read The Full Circular
The post RBI Launches US Dollar-Rupee Forex Swap Facility for ECBs and OFCBs appeared first on Taxmann Blog.
