Cover in Dubai, dollars in India, foreign banks are ready to play

Foreign banks, including Middle East, US, European and Swiss lenders, are asking Indian banks to issue standby letters of credit (SBLCs) from offshore branches in Dubai and Singapore instead of India for the special FCNR deposit scheme, in order to preserve their country-risk exposure limits. The arrangement allows NRIs to leverage FCNR deposits by more than nine times the initial amount, significantly boosting inflows. Bankers clarified there is no change in risk perception about India, and paperwork is expected to be completed within a week.