Discuss the role of concessional swap facilities in stabilising the rupee. Compare RBI's 2026 FCNR(B)/ECB/OFCB scheme with the 2013 precedent.

A concessional swap facility is a window where the RBI absorbs part of the hedging cost of foreign currency liabilities, offering banks a subsidised forward rate. It converts episodic rupee pressure into an opportunity to attract stable, longer-tenor dollar inflows rather than burning reserves in the spot market.

How concessional swaps stabilise the rupee

• Cost arbitrage: banks and corporates hedge at a fixed, below-market rate, making foreign borrowing viable even when forward premia spike — the 2026 window covers FCNR(B) deposits, ECBs and OFCBs [1].
• Non-debt-creating optics: inflows come as long-maturity deposits and borrowings (ECBs of three years and above; swap tenor capped at five years), so hot-money risk is limited [1].
• Reserve accretion without spot intervention: dollars accrue to the RBI on the near leg, cushioning the balance of payments; USD 40,816 million was mobilised up to 31 July 2026, with FCNR(B) contributing USD 36,725 million [2].
• Signalling: a credible, time-bound window anchors expectations and discourages speculative shorting of the rupee.

2026 scheme versus the 2013 precedent

Dimension	2013 window	2026 facility
Trigger	Taper-tantrum capital flight	Renewed depreciation pressure
Coverage	FCNR(B) deposits only [3]	FCNR(B) plus ECBs and OFCBs [1]
Terms	Fixed 3.5% p.a. swap cost; minimum three-year deposit with one-year lock-in [3]	Concessional rate; ECB maturity ≥3 years, swap up to 5 years [1]
Add-ons	Limited	Banks may lend to non-residents or issue SBLCs against such deposits [1]
Window	Deposits after 6 September 2013 [3]	FCNR(B) to 30 September 2026; ECB/OFCB to 31 December 2026 [1]

The 2026 design is thus broader-based and better sequenced, learning from 2013's redemption-bunching risk by staggering instruments and end-dates. Used sparingly and transparently, such facilities complement — not substitute for — export competitiveness and a moderate current account deficit, which remain the durable anchors of external stability.