The Reserve Bank of India is going to offer the money lenders the low-cost swap lines at below-market prices. This would help the banks to raise funds from the Non Resident Indians. Though the NRE deposits have an attractive rate of interest, banks are unable to focus on this program, because of the hedging cost. On Monday, a special meeting was held, in which the RBI Deputy Governor Mr. HR Khan and other executives from Indian and Foreign banks participated. The central bank is considering to buy back the dollars, at a discounted rate, for three to five years. In the market, the value of INR continuously slides and it is very profitable for the NRI investors and at the same time, the banks are unable to face the additional financial burden.
Right now, the RBI seriously considers to introduce the new low-cost swap lines for the banks, which would be below the market price of the INR. The RBI has a very clear idea in bringing the dollars into India, by way of the NRI deposits.