FCNR-B deposits: Economic benefits outweigh hedging costs, says RBI Governor
RBI Governor Sanjay Malhotra has defended the special USD-INR forex swap facility introduced on June 8, 2026, stating that its economic benefits outweigh the hedging costs borne by the central bank.
The facility enables banks to offer higher interest rates on FCNR(B) deposits by transferring currency hedging expenses to the RBI. According to Malhotra, this arrangement supports India's foreign exchange reserves and strengthens the country's balance of payments position.
The move reflects the RBI's strategy to attract foreign currency deposits while managing associated costs as part of broader efforts to bolster external financial stability.
