The Reserve Bank of India has made it easier for banks to use FCNR(B) deposits (foreign currency deposits) by allowing them to give loans against these deposits. RBI will help banks manage currency risk through forex swaps, mainly on the main deposit amount. This step is taken to attract more dollars into India, and because of this, interest rates on these deposits may rise to around 6–7.1%.
RBI has also made rules clearer for standby letters of credit and introduced a new swap facility for companies taking loans from abroad, which will make it easier and cheaper for businesses to manage dollar-related risks.
economictimes