The RBI issued directions earlier this week to Indian banks on the provisions they ought to make against loans, if the entities to which they have lent funds in foreign currency have not hedged against risk of changes in the exchange rate. After all, if an Indian company had borrowed one dollar a year ago, and has to close the loan now, it would have to shell out more rupees today to close one dollar’s worth of debt, than when it received the loan. 

Today, ratings agency CARE Edge Chief Economist Rajani Sinha joins us to share her views on what the trigger for the Reserve Bank's move is. 

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