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      Question

      The exchange rate risk is absorbed by which of the

      following under FCNR Deposit scheme?
      A The bank that accepts such deposits Correct Answer Incorrect Answer
      B RBI Correct Answer Incorrect Answer
      C GOI Correct Answer Incorrect Answer
      D Depositor Correct Answer Incorrect Answer
      E Bank and depositor share equally Correct Answer Incorrect Answer

      Solution

      FCNR accounts are protected against forex rate risks (changes in the value of rupee vis-a-vis the currency in which the account is denominated) as they are maintained in a foreign currency. In other words, the principal and the interest are transferred in the currency in which the account is maintained sans any loss of exchange. The forex risk is therefore absorbed by the bank.

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