The Reserve Bank of India (RBI) has introduced a new framework allowing domestic banks to extend credit against foreign currency deposits held by non-residents, a move designed to bolster dollar inflows and deepen the country's foreign exchange market.
Under the new rules, banks can utilize Foreign Currency Non-Resident (FCNR) deposits as collateral for lending.
According to Hindu Businessline, which first reported the development, analysts estimate the initiative could attract up to $55 billion in foreign currency inflows over the coming months.
The central bank has also introduced incentives, including subsidized hedging costs for these deposits, to make the scheme more attractive to international investors.
According to Hindu Businessline, which first reported the development, analysts estimate the initiative could attract up to $55 billion in foreign currency inflows over the coming months.
The policy shift arrives as foreign investors have already increased their exposure to Indian assets.
Recent data indicates that foreign investors have poured money into Indian government bonds at their fastest pace in 15 months, driven by cooling global oil prices and reduced geopolitical tensions in the Middle East.