The rupee got a booster shot on Friday, with the Reserve Bank of India (RBI) announcing crucial measures to attract foreign capital via foreign currency non-resident (bank) deposits, overseas borrowings, government securities and equity investments.Soumya Kanti Ghosh, Group Chief Economic Adviser, State Bank of India, assessed that the RBI’s measures potential capital flows of at least $40 billion and the rupee pulling back towards 92-93 levels. The measures buoyed the rupee, which posted it biggest single day gain since April 2 on Friday. It perked up 84 paise to close at 94.9450/dollar against the previous close of 95.89.The five measures announced by the RBI to attract foreign capital include a facility for bearing the full hedging cost to banks for raising fresh 3- to 5-year foreign currency non-resident (bank)/FCNR (B) deposits and a facility of concessional forex swap to incentivise external commercial borrowings (ECBs) by public sector undertakings (PSUs).Further, for government securities (G-Secs) under the fully accessible route (FAR), the RBI will expand the universe of ‘specified securities’ by including all new issuances of 15-, 30- and 40-year tenor G-secs. In addition, limits pertaining to short-term investment, concentration and individual securities on FPI investment under the general route will be removed.tax benefitsRBI Governor Sanjay Malhotra said these measures, along with the tax benefits provided by the government, should help attract foreign capital for government borrowing.The RBI will up the limits for investment by NRIs and OCIs in equity instruments traded on the stock market without SEBI registration are being increased. Further, the same facility will be extended to all individual Persons Resident Outside India (PROIs) on par with NRIs and OCIs.The central bank will also restore the time for realisation of export proceeds to nine months from the earlier 15 months. Malhotra said: “In terms of the quantum, we are not targeting any particular amount. but we do expect healthy flows. We are quite confident of a very healthy, a much better balance of payments this year as compared to what it would have been otherwise.”Banking expert V Viswanathan observed that no bank is offering attractive rates on FCNR (B) deposits though the RBI permits them to quote rates up to overnight alternative reference rate (ARR) plus 400 basis points (bps) for a deposit of 1-3 years and spread of 500 bps for tenor of 3-5 years.“Part of the reason is the banks have to bear the exchange risk, which they cover themselves using forward contracts or swap facilities. Now since the full hedging cost is passed onto RBI in respect of FCNR (B) deposits for 3-5 years, the banks may be tempted to raise interest rates for this bucket [as the hedging cost is zero for new deposits]. This may increase the US dollar inflows,” he said.V Rama Chandra Reddy, Head – Treasury, Karur Vysya Bank, said the RBI has introduced a strong incentive package for FCNR(B) deposits by permitting banks to offer full hedging support on 3- to 5-year deposits and exempting incremental mobilisation from reserve requirements.“This lowers the overall cost for banks, enabling them to offer more attractive rates and attract stable foreign currency deposits, while leveraging the tax-free nature of FCNR(B) schemes,” he said.Reddy noted that the concessional swap arrangement for PSU borrowings under ECBs is expected to reduce hedging costs and improve the economics of overseas borrowing. This could encourage higher ECB issuance by eligible entities, resulting in additional foreign currency inflows.Published on June 5, 2026