UPSC Prelims Practice Questions — RBI says $40.82 bn mobilised via swap facility till July 31

Q1. Under the Reserve Bank of India's concessional swap facility operationalised in June 2026, what exactly is the 'swap' that an eligible bank enters into with the RBI?

  • A. An interest rate swap under which the RBI exchanges the floating coupon on the eligible inflow for a fixed rate of 3.5 per cent per annum
  • B. A plain buy/sell foreign exchange swap covering only the principal amount of the eligible inflow, the interest component being excluded
  • C. A sell/buy foreign exchange swap under which the RBI first sells dollars to the bank and repurchases them on maturity of the deposit
  • D. A bilateral currency swap line, on the pattern of central bank swap arrangements, covering both principal and accrued interest of the inflow

Q2. Consider the following statements regarding the Reserve Bank of India's concessional swap facility of 2026: 1. The facility was announced on June 5, 2026 and became operational on June 8, 2026. 2. The window for booking fresh FCNR(B) deposits under the facility closes on December 31, 2026, while the window for ECBs and OFCBs closes on September 30, 2026. 3. An External Commercial Borrowing qualifies for the swap only if it has an average maturity of three years or more, and the swap tenor is subject to a maximum of five years. Which of the statements given above is/are correct?

  1. The facility was announced on June 5, 2026 and became operational on June 8, 2026.
  2. The window for booking fresh FCNR(B) deposits under the facility closes on December 31, 2026, while the window for ECBs and OFCBs closes on September 30, 2026.
  3. An External Commercial Borrowing qualifies for the swap only if it has an average maturity of three years or more, and the swap tenor is subject to a maximum of five years.
  • A. 1 only
  • B. 1 and 3 only
  • C. 2 and 3 only
  • D. 1, 2 and 3

Q3. Consider the following statements comparing the two readings of mobilisation under the RBI's concessional swap facility in July 2026: 1. Cumulative mobilisation rose from $20.72 billion as on July 17, 2026 to $40.82 billion as on July 31, 2026, nearly doubling within the fortnight. 2. FCNR(B) deposits accounted for over 80 per cent of the cumulative amount on July 17, 2026 and for about 90 per cent of it by July 31, 2026. 3. On both dates, inflows routed through External Commercial Borrowings exceeded those through Overseas Foreign Currency Borrowings. Which of the statements given above is/are correct?

  1. Cumulative mobilisation rose from $20.72 billion as on July 17, 2026 to $40.82 billion as on July 31, 2026, nearly doubling within the fortnight.
  2. FCNR(B) deposits accounted for over 80 per cent of the cumulative amount on July 17, 2026 and for about 90 per cent of it by July 31, 2026.
  3. On both dates, inflows routed through External Commercial Borrowings exceeded those through Overseas Foreign Currency Borrowings.
  • A. 1 and 2 only
  • B. 1 and 3 only
  • C. 2 and 3 only
  • D. 1, 2 and 3

Q4. Under the RBI's 2026 concessional swap facility, by approximately how much did cumulative mobilisation through FCNR(B) deposits alone increase between July 17, 2026 and July 31, 2026?

  • A. About $10.6 billion
  • B. About $14.5 billion
  • C. About $19.3 billion
  • D. About $23.4 billion

Q5. Consider the following statements about the 2013 concessional swap window and its 2026 counterpart: 1. In 2013 the concessional swap was confined exclusively to FCNR(B) deposits, no other category of foreign currency inflow being eligible for any concessional swap in that episode. 2. The 2013 window covered fresh FCNR(B) deposits of three years and above, which banks could swap with the RBI at a fixed concessional rate of 3.5 per cent per annum. 3. Mobilisation under the 2026 facility surpassed the roughly $34 billion raised under the 2013 windows in less than two months of the facility's operation. Which of the statements given above is/are correct?

  1. In 2013 the concessional swap was confined exclusively to FCNR(B) deposits, no other category of foreign currency inflow being eligible for any concessional swap in that episode.
  2. The 2013 window covered fresh FCNR(B) deposits of three years and above, which banks could swap with the RBI at a fixed concessional rate of 3.5 per cent per annum.
  3. Mobilisation under the 2026 facility surpassed the roughly $34 billion raised under the 2013 windows in less than two months of the facility's operation.
  • A. 1 and 2 only
  • B. 1 and 3 only
  • C. 2 and 3 only
  • D. 1, 2 and 3

Q6. During the 'taper tantrum' episode, banks were allowed to swap freshly mobilised foreign currency deposits with the central bank at a concessional fixed rate. This window was operationalised by which institution, and in which year?

  • A. The Reserve Bank of India, in the year 2013, under Governor Raghuram Rajan
  • B. The State Bank of India, in the year 2000, through the India Millennium Deposits scheme
  • C. The State Bank of India, in the year 1998, through the Resurgent India Bonds issue
  • D. The Reserve Bank of India, in the year 1991, alongside the pledging of gold reserves abroad

Q7. Consider the following statements comparing FCNR(B) accounts with NRE accounts: 1. An FCNR(B) account can be opened only as a term deposit, whereas an NRE account may be maintained as a savings, current, recurring or fixed deposit account. 2. Balances in an FCNR(B) account are denominated in Indian rupees, the exchange risk being borne by the depositor, while NRE balances are held in foreign currency. 3. FCNR(B) term deposits may be accepted for terms of not less than one year and not more than five years. Which of the statements given above is/are correct?

  1. An FCNR(B) account can be opened only as a term deposit, whereas an NRE account may be maintained as a savings, current, recurring or fixed deposit account.
  2. Balances in an FCNR(B) account are denominated in Indian rupees, the exchange risk being borne by the depositor, while NRE balances are held in foreign currency.
  3. FCNR(B) term deposits may be accepted for terms of not less than one year and not more than five years.
  • A. 1 only
  • B. 1 and 3 only
  • C. 2 and 3 only
  • D. 1, 2 and 3

Q8. Which one of the following best describes an FCNR(B) account as permitted under India's foreign exchange regulations?

  • A. A deposit held in India in a freely convertible foreign currency by an NRI or PIO, with principal and interest fully repatriable
  • B. A rupee deposit held in India by an NRI or PIO into which income earned in India is credited, remittable up to USD 1 million a year
  • C. A rupee deposit held in India by an NRI or PIO, fully repatriable, maintainable as a savings or recurring deposit account as well
  • D. A foreign currency account maintained outside India by a person of Indian origin, out of earnings from overseas employment

Q9. The Reserve Bank of India's framework governing External Commercial Borrowings derives its legal authority from which one of the following?

  • A. The Foreign Exchange Management (Borrowing and Lending) Regulations, 2018 notified under the Foreign Exchange Management Act, 1999
  • B. The Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations under the same parent Act
  • C. The Foreign Contribution (Regulation) Act, 2010 administered by the Ministry of Home Affairs through designated banks
  • D. The Government Securities Act, 2006 read with the relevant provisions of the Reserve Bank of India Act, 1934

Q10. Consider the following statements about the parameters of the ECB framework: 1. The all-in-cost ceiling is the benchmark rate plus 500 basis points for INR-denominated ECBs and the benchmark rate plus 450 basis points for foreign currency denominated ECBs. 2. Eligible borrowers may raise up to USD 750 million or its equivalent per financial year under the automatic route. 3. Although the minimum average maturity period is generally three years, manufacturing sector companies may raise ECBs of up to USD 50 million per financial year with a minimum average maturity of one year. Which of the statements given above is/are correct?

  1. The all-in-cost ceiling is the benchmark rate plus 500 basis points for INR-denominated ECBs and the benchmark rate plus 450 basis points for foreign currency denominated ECBs.
  2. Eligible borrowers may raise up to USD 750 million or its equivalent per financial year under the automatic route.
  3. Although the minimum average maturity period is generally three years, manufacturing sector companies may raise ECBs of up to USD 50 million per financial year with a minimum average maturity of one year.
  • A. 1 and 2 only
  • B. 2 only
  • C. 2 and 3 only
  • D. 1, 2 and 3

Q11. In reports on the RBI's defence of the rupee, its 'net short dollar forward book' refers to which one of the following?

  • A. The stock of dollars the RBI has contracted to buy from banks in the spot market for settlement on a future date
  • B. The net outstanding commitments of the RBI to sell dollars at future dates, arising from intervention in the forward market
  • C. The share of foreign currency assets that the RBI has lent to banks under repurchase transactions against government securities
  • D. The net external debt of the country falling due for repayment within one year, tracked against the level of foreign exchange reserves