RBI eased norms to attract foreign currency inflows, leading banks like Ujjivan Small Finance Bank and DBS Bank India to raise returns on FCNR(B) deposits, offering NRIs higher interest rates.
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Key takeaway
RBI eases FCNR(B) deposit norms to attract foreign currency inflows.
- Step 1 · The triggerRBI eases FCNR(B) deposit rate caps to attract foreign currency inflows.
- Step 2 · Knock-onBanks raise FCNR deposit rates, increasing cost of funds and potentially compressing NIMs.
- Step 3 · Reaches youHigher deposit rates may lead to tighter lending spreads, affecting SME loan pricing in India.
The trigger is reported by the source below. The steps that follow are Branch²’s traced reasoning — how the shock could reach a business like yours, not a prediction.
Source: Economic Times (Markets)
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