Union Finance Minister Nirmala Sitharaman met bank MDs and CEOs in New Delhi to discuss three foreign capital mobilisation instruments: Foreign Currency Non-Resident Bank (FCNR(B)) deposits, External Commercial Borrowings (ECB), and Overseas Foreign Currency Borrowings (OFCB), along with associated swap mechanisms. The meeting aimed to boost forex inflows amid global uncertainty. RBI's swap windows for FCNR(B) and OFCB provide banks concessional hedging rates to attract NRI and overseas institutional funds into India.

India's current account deficit and rupee volatility periodically create pressure on forex reserves. To address this structurally, the government and RBI use three key instruments. FCNR(B) deposits are fixed-term foreign currency deposits by NRIs held in Indian banks — the currency risk sits with the bank, not the depositor. ECBs are rupee or foreign currency loans borrowed by Indian entities from overseas lenders, governed by RBI's ECB framework with all-in-cost ceilings. OFCBs are similar but specifically refer to overseas borrowings by Indian banks in foreign currency.

The swap mechanism is the critical enabler here. When RBI offers a forex swap window, it essentially allows banks to convert the foreign currency raised into rupees at a known forward rate, removing exchange rate uncertainty. This makes FCNR(B) mobilisation far more attractive for banks. India famously used this in 2013 under Raghuram Rajan's RBI to mobilise nearly $34 billion in FCNR(B) deposits, which stabilised the rupee during the taper tantrum crisis.

The 2025-26 revival of these discussions signals that India is again proactively building forex buffers, possibly ahead of US Fed policy shifts or to fund the current account gap. For RBI Grade B aspirants, the significance lies in understanding how these three instruments interact with monetary policy, capital account management, and the RBI's balance sheet.