Mumbai, June 5 -- Amid significant depreciation in the domestic currency, the Reserve Bank of India on Friday said it will absorb the hedging cost for foreign currency deposits mobilized by Indian banks till 30 September 2026. The move aims to encourage the flow of foreign currency deposits into the country.

"A similar facility for bearing the full hedging cost shall be provided till 30th September 2026 to AD (authorized dealer) banks for raising fresh 3-5-year FCNR (B) [foreign currency non-resident (bank)] deposits," Governor Sanjay Malhotra said in his monetary policy statement.

The measure should be a "game-changer" as it would help attract foreign currency flows while allowing banks to bolster their deposit growth and meet client f...