India, Oct. 8 -- The Reserve Bank of India (RBI) Governor Sanjay Malhotra on Wednesday said that economic benefit is more important than the hedging cost borne by the Central Bank on the foreign currency non-resident (bank) or FCNR(B) deposits scheme.

In an effort to boost foreign exchange reserves and stabilise balance of payment conditions, the RBI announced a special forex swap facility for banks in June this year, allowing lenders to raise interest rates on deposits in FCNR (B) accounts.

The now-closed scheme enabled banks to offer higher interest rates on deposits in foreign currency by non-resident Indians as the currency risk or hedging cost was borne by the Central Bank. Analysts had pegged this cost at around 2.8-3.0 per cent a...