The Reserve Bank of India on June 8 introduced a US dollar-rupee forex swap facility aimed at supporting capital inflows linked to external commercial borrowings by public sector undertakings and overseas foreign currency borrowings by banks.

Under the facility, eligible authorised dealer category-I banks can sell US dollars to the RBI at the FBIL Reference Rate and buy them back at the end of the swap period, in multiples of $1 million. The swap carries a fixed rate of 1.5% per annum, compounded semi-annually, with a maximum tenor of five years.

Eligibility covers PSU ECBs with an average maturity of at least three years and banks’ overseas foreign currency borrowings with a minimum maturity of three years. The window is open from June 8 until December 31, 2026, and remains available up to January 15, 2027 for eligible ECB drawdowns and OFCB flows received by December 31. ECBs raised to refinance existing debt and borrowings with embedded options are excluded.

The RBI also issued guidelines allowing authorised dealer category-I banks to use the swap facility for fresh and renewed FCNR-B deposits with a minimum tenor of three years and a maximum tenure of five years, with the facility available for deposits mobilised until September 30.

The rupee closed at 95.7075 per US dollar after a 0.8% decline, following market moves that offset earlier support from the RBI measures.