Indian banks can now lend against FCNR(B) deposits, with the RBI offering forex swaps only on the principal amount. This move aims to attract dollars by absorbing currency hedging costs for banks, boosting FCNR(B) rates to 6-7.1%. The central bank also clarified rules for stand-by letters of credit and introduced a swap facility for external commercial borrowings, easing dollar hedging for businesses.
The RBI has clarified that Indian banks can now offer loans against FCNR(B) deposits, providing forex swaps on the principal amount to attract dollars. This initiative boosts FCNR(B) rates to 6-7.1% by absorbing currency hedging costs for banks. Additionally, the RBI introduced…
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