What changed
A new swap facility has been introduced for eligible PSU external commercial borrowings (average maturity of three years and above) and for Category‑I banks’ overseas foreign‑currency borrowings (minimum three years). The swap with RBI is only in US dollars, with a maximum tenor coterminous with the loan maturity but not exceeding five years. Weekly swap limits are tied to the amount of eligible inflows in the preceding week(s).
What it means for you
Banks can now hedge USD exposure of qualifying loans by selling dollars to the RBI and buying them back later at a known cost, improving liquidity management. PSUs gain a predictable hedging tool for new and undrawn ECB portions, while banks can extend the same benefit to their OFCB customers. The facility operates daily, subject to market‑based limits.
What you must do
- Verify that the ECB or OFCB meets the three‑year minimum maturity and other eligibility criteria.
- Submit a signed declaration to the RBI confirming the swap is for hedging eligible inflows.
- Request the swap via email to the Financial Markets Operations Department, specifying amount (in multiples of USD 1 million) and tenor.
- Track weekly eligible inflow volumes to ensure swap requests stay within the RBI‑imposed cap.
Who it affects
Public‑sector undertakings with ECBs, Category‑I authorised dealer banks, Banks facilitating ECB/OFCB transactions, RBI’s Financial Markets Operations Department
Can the swap be used for ECBs that already have embedded options?
No. The facility excludes borrowings that contain embedded options or are raised for refinancing/repayment of existing ECBs.