Officials said significant funds are raised in the last three months of a fiscal since board approvals for projects are spread over the initial months of a financial year.
“Multiple government entities have requested the RBI to extend the forex hedge facility by another three months,” a senior official told ET, adding the request is being considered by the central bank.
“Fund raise requirements increase closer to end of the fiscal,” the official said.
Last month, RBI had introduced a US Dollar–Rupee Forex Swap Facility (Swap Facility). This provided currency hedging support to public sector entities for raising ECB of average maturity of three years or longer. These are to be drawn down between June 8, 2026 to December 31, 2026.
According to official data issued last week, banks received over $17.4 billion through Foreign Currency Non-Resident (Bank) [FCNR(B)] deposits. Nearly $ 2 billion were raised through Overseas Foreign Currency Borrowings (OFCBs), and over $ 1.3 billion through ECBs.
In all, banks have mobilised over $ 20.7 billion in foreign exchange inflows under the RBI special swap scheme till Friday last week.The inflow of dollars is expected to ease pressure on the rupee.
Under the swap, banks sell US Dollars to RBI and simultaneously agree to buy back the same amount at maturity, an EY note said. The swap is undertaken in multiples of $ 1 million at a fixed rate of 1.5% per annum (compounded semi-annually). In the reverse leg, banks return rupee funds along with the swap premium to receive the US Dollars back.
“The fixed dollar hedging cost in a big support for government companies wanting to opt for ECBs,” the official said.