Indian banks are advocating for the Reserve Bank of India (RBI) to ease restrictions on standby letters of credit (SBLC) to attract more funds from the non-resident Indian (NRI) community. This request comes as the RBI explores a foreign currency non-resident (FCNR) special deposit scheme to increase dollar supply. The SBLC mechanism previously enabled overseas banks to lend to NRIs, who could leverage their deposits significantly. However, the RBI has limited SBLC usage to genuine trade payments, which has restricted leveraging and, consequently, the inflow of FCNR deposits. Banks have indicated that while the FCNR route could be a quick solution for dollar inflows, it may be costly due to the narrowed interest rate gap between the US and India. There are also discussions about potential measures to control capital outflows, which may be announced alongside the monetary policy on May 6, especially if external pressures on the rupee continue.