GK and monthly revision

Banks can offer loans for FCNR (B), rebook deposits, RBI clarifies

The Reserve Bank of India (RBI) has permitted Indian banks to extend loans against Foreign Currency Non-Resident (FCNR(B)) deposits, with forex swaps applied only to the principal amount. This initiative is designed to attract dollar deposits by mitigating currency hedging costs for banks, thus increasing FCNR(B) interest rates to a range of 6-7.1%. Furthermore, the RBI has clarified regulations regarding stand-by letters of credit and introduced a swap facility for external commercial borrowings, facilitating easier dollar hedging for businesses.