UPSC Prelims Practice Questions — RBI special swap sees over $20 bn inflow
Q1. With reference to the forex inflows mobilised under the RBI's 2026 special concessional swap facility (as of July 17, 2026), consider the following statements:
1. FCNR(B) deposits accounted for the largest single share, at about $17.4 billion.
2. Overseas Foreign Currency Borrowings (OFCBs) contributed $1.34 billion, more than the External Commercial Borrowings (ECBs).
3. The cumulative inflow across all eligible instruments was about $20.72 billion.
Which of the statements given above is/are correct?
- FCNR(B) deposits accounted for the largest single share, at about $17.4 billion.
- Overseas Foreign Currency Borrowings (OFCBs) contributed $1.34 billion, more than the External Commercial Borrowings (ECBs).
- The cumulative inflow across all eligible instruments was about $20.72 billion.
- A. 1 and 2 only
- B. 2 and 3 only
- C. 1 and 3 only
- D. 1, 2 and 3
Q2. How many distinct categories of foreign-currency inflow are eligible under the RBI's 2026 special concessional swap facility?
- A. Two
- B. Three
- C. Four
- D. Five
Q3. With reference to the timelines of the RBI's 2026 special concessional swap facility, consider the following statements:
1. Fresh FCNR(B) deposits are eligible if mobilised up to September 30, 2026.
2. ECBs and OFCBs are eligible up to December 31, 2026.
3. The facility was announced in the RBI's Monetary Policy Statement of June 5, 2026.
4. The facility was operationalised on July 17, 2026.
Which of the statements given above is/are NOT correct?
- Fresh FCNR(B) deposits are eligible if mobilised up to September 30, 2026.
- ECBs and OFCBs are eligible up to December 31, 2026.
- The facility was announced in the RBI's Monetary Policy Statement of June 5, 2026.
- The facility was operationalised on July 17, 2026.
- A. 1 and 2 only
- B. 3 only
- C. 4 only
- D. 2 and 4 only
Q4. Under the RBI's 2026 concessional swap facility, up to which date does the swap window remain open for banks to execute swaps in respect of eligible ECB drawdowns and OFCB flows?
- A. September 30, 2026
- B. October 16, 2026
- C. December 31, 2026
- D. January 15, 2027
Q5. Which one of the following is the primary distinguishing feature of a Foreign Currency Non-Resident (Bank) — FCNR(B) — deposit as compared with a Non-Resident (External) rupee deposit?
- A. It is maintained in a designated foreign currency rather than in rupees, so the depositor bears no rupee exchange-rate risk on the principal.
- B. It is the only non-resident deposit on which interest is entirely tax-exempt in India in every case.
- C. It can be opened exclusively by foreign institutional investors and foreign portfolio investors.
- D. It permits unlimited premature withdrawal at any time without any conditions whatsoever.
Q6. With reference to fresh FCNR(B) deposits eligible under the RBI's 2026 swap facility, consider the following statements:
1. Such deposits are accepted by Authorised Dealer Category-I banks.
2. Eligible fresh deposits have a tenor of three to five years.
3. The swap covers both the principal and the interest component of the deposit.
4. Deposits mobilised under the scheme are exempted from CRR and SLR requirements.
Which of the statements given above is/are NOT correct?
- Such deposits are accepted by Authorised Dealer Category-I banks.
- Eligible fresh deposits have a tenor of three to five years.
- The swap covers both the principal and the interest component of the deposit.
- Deposits mobilised under the scheme are exempted from CRR and SLR requirements.
- A. 1 and 3 only
- B. 3 only
- C. 3 and 4 only
- D. 2 only
Q7. External Commercial Borrowings (ECBs) in India are regulated by the Reserve Bank of India principally under which one of the following statutes?
- A. The Foreign Exchange Management Act, 1999
- B. The Banking Regulation Act, 1949
- C. The Reserve Bank of India Act, 1934
- D. The Foreign Contribution (Regulation) Act, 2010
Q8. Which one of the following best describes an External Commercial Borrowing (ECB)?
- A. A borrowing by the Government of India from multilateral institutions raised solely for infrastructure creation.
- B. A commercial loan raised by an eligible resident entity from a recognised non-resident lender, subject to parameters such as minimum maturity and all-in-cost ceiling.
- C. Any and all foreign-currency deposits held by non-residents with banks in India.
- D. An equity investment by a non-resident that necessarily confers management control over the Indian entity.
Q9. The RBI's 2013 FCNR(B) swap window, deployed during the taper tantrum, mobilised approximately how much in forex inflows?
- A. About $10 billion
- B. About $17.4 billion
- C. About $34 billion
- D. About $20.72 billion
Q10. In the context of the RBI's 2026 swap facility, Overseas Foreign Currency Borrowings (OFCBs) refer principally to foreign-currency borrowings raised by which one of the following?
- A. Authorised Dealer Category-I banks
- B. Public-sector undertakings and eligible corporates
- C. Non-resident individual depositors
- D. State governments and municipal bodies
Q11. With reference to the Balance of Payments (BoP) and the RBI's June 5, 2026 package, consider the following statements:
1. Inflows mobilised through the 2026 swap facility are recorded under the capital account of the BoP.
2. The current account of the BoP records only merchandise trade and excludes all services and transfers.
3. The June 5, 2026 RBI package was aimed at strengthening the balance of payments and incentivising capital inflows.
Which of the statements given above is/are correct?
- Inflows mobilised through the 2026 swap facility are recorded under the capital account of the BoP.
- The current account of the BoP records only merchandise trade and excludes all services and transfers.
- The June 5, 2026 RBI package was aimed at strengthening the balance of payments and incentivising capital inflows.
- A. 1 and 2 only
- B. 1 and 3 only
- C. 2 and 3 only
- D. 1, 2 and 3
Q12. Consider the following instruments:
1. Spot market dollar sales and purchases
2. Non-deliverable forward (NDF) market intervention
3. Open Market Operations in government securities
4. Dollar-rupee buy/sell swaps
How many of the above are directly used by the RBI as tools to manage the rupee's exchange rate?
- A. Only one
- B. Only two
- C. Only three
- D. All four