Foreign banks are now rushing to fund Non Resident Indians who can invest the money into Indian dollar deposits under the FCNR scheme. The RBI has reduced the hedging cost of the FCNR deposit to 3.5%. (This applies for a 3-5 year term) So the banks that offer about 5% in dollar terms. will have to earn about 8.5% which is a low cost of funds. This can be hugely profitable if you are an NRI. Let us say you can borrow for 3 years on a balloon payment basis at 4% fixed rate. (that is, you get to pay …
[via Capital Mind]
Follow us @investmentheat – lists / @sectorheat