..............While the dollar supplied by the banks would add to RBI's forex reserves, the arrangement would entail RBI bearing the exchange rate risk and offering a cheaper hedging arrangement than what banks have to otherwise pay if they cover the exchange fluctuation risk in the open market. "This would be attractive for banks which can use the money to buy government bonds and lend. Also, their overseas branches can offer leverage to NRI clients," said a treasurer with an MNC bank...............
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