IMG INVESTIGATION · Macro
India built a $136 billion dollar bridge. What happens when it comes due?
How FCNR(B) deposits, a zero-swap-point RBI hedge and a record reserve stock strengthened India’s external buffer—while moving currency risk, rupee liquidity and maturity concentration onto a longer clock.
CENTRAL FINDING
A stronger reserve wall today creates a maturity test tomorrow.
India’s 2026 FCNR(B) window bought valuable time, not free insurance. The scheme converted long-tenor non-resident deposits into immediate dollar reserves and rupee funding for banks. Its at-par swap removed most principal currency risk from participating banks and transferred the economic exposure to the RBI’s future dollar obligation. The result is a stronger defence against oil, portfolio-flow and geopolitical shocks today, paired with excess domestic liquidity and a concentrated three-to-five-year maturity test tomorrow.
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How FCNR(B) deposits, a zero-swap-point RBI hedge and a record reserve stock strengthened India’s external buffer—while moving currency risk, rupee liquidity and maturity concentration onto a longer clock.
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