How would the swap be re-priced once a bank approaches RBI for cancellation of the swap subsequent to premature withdrawal of the underlying FCNR (B) deposits?

Swap repricing: banks must re-fix swap cost on premature FCNR(B) withdrawal and adjust it in a new swap transaction.

If an FCNR(B)-linked swap is terminated after premature deposit withdrawal, the bank determines the completed and residual tenors, observes the prevailing market swap rate for the residual tenor, and sums that rate with prior cost components to establish a revised swap cost for the completed period. That revised cost is then applied to the near leg of a new offsetting swap entered at cancellation so the terminated swap is economically adjusted to reflect both the completed tenor cost and the market rate for the residual tenor.