SynopsisOverseas banks are finding a clever way to tap India's dollar demand without exceeding exposure limits. They're asking Indian banks to issue guarantees, known as SBLCs, from their Singapore or UAE branches instead of India. This allows foreign lenders to offer substantial loans to NRIs for FCNR deposits, boosting inflows while shifting country risk away from India. Arrangements are expected to finalize soon.ReutersBased on the comfort from SBLCs, foreign banks would lend large amounts to NRIs who, after placing an initial FCNR deposit with a bank in India from their own funds, would park the borrowed money as FCNR deposits with the same bank.Mumbai: Several overseas banks who are eager to cash in on India's dollar demand but fear exhausting exposure limits to India, are offering a smart way out.They have asked Indian banks preparing to mobilise money from the diaspora, to issue 'covers' from other jurisdictions like Singapore and UAE instead of India, two senior bankers participating in the discussions told ET.These covers or guarantees -- standby letter of credit (SBLC) in banking parlance - is a key feature in the special foreign currency non-resident (FCNR) scheme where banks in India would offer tempting returns to attract deposits from non-resident Indians (NRIs).Based on the comfort from SBLCs, foreign banks would lend large amounts to NRIs who, after placing an initial FCNR deposit with a bank in India from their own funds, would park the borrowed money as FCNR deposits with the same bank. Such leverage, as seen in the past, exceed nine times the initial deposit, significantly raises the return, and increases FCNR inflows.Though the overseas banks lend to NRIs, their exposure is not to the borrowers, but to the Indian bank which issues the SBLC.