The Reserve Bank of India (RBI) is considering absorbing at least half of the hedging costs, which range from 3.5% to 4%, to make it feasible for public sector undertakings (PSUs) to secure debt from international markets. Bankers indicate that for PSUs to effectively borrow abroad, the total cost of funds must be comparable to local funding rates, which can be achieved through significant reductions in hedging costs. Recently, the RBI announced five measures aimed at attracting foreign capital, including a concessional forex swap facility for external commercial borrowings (ECBs) by PSUs, valid until September 30, 2026. Although specific details about the scheme are yet to be released, industry executives believe that the success of this initiative hinges on the extent of RBI's involvement in covering hedging costs. Rajkiran Rai, CEO of the National Bank for Financing Infrastructure and Development (NaBFID), noted that the RBI's arrangement could lead to lower borrowing costs, encouraging dollar inflows as borrowers exchange dollars for rupees with the RBI. The initiative is expected to benefit several PSUs, including Rural Electrification Corp and Power Finance Corp, by aligning their overseas borrowing costs with domestic rates.