Key Facts

• The RBI has introduced a swap facility that allows NRIs to leverage their deposits to draw dollars, with the swap covering only the principal amount, not the interest.
• The new measure is designed to attract more foreign currency into India, which will help boost the country's foreign exchange reserves and support the rupee.
• The RBI's decision to limit the swap to only the principal amount, excluding interest, is seen as a cautious approach to managing the risks associated with such transactions.
• The move is expected to benefit NRIs who have significant deposits in Indian banks, as they will now be able to tap into these funds to meet their dollar requirements.
• The RBI's initiative is part of a broader effort to deepen India's bond markets and make them more accessible to foreign investors, which will help increase the country's foreign exchange reserves.