Consider the following statements regarding Foreign Currency Non-Resident (Bank) [FCNR(B)] deposits:1.FCNR(B) deposits must be maintained in approved foreign currencies and not in Indian Rupees.2.The exchange rate volatility risk associated with unhedged FCNR(B) deposits is borne entirely by the depositor rather than the deposit-taking bank.

Statement 1 is correct as FCNR(B) accounts are foreign currency denominated fixed deposit accounts maintained by non-residents in authorized Indian banks. Statement 2 is incorrect because unlike NRE accounts where the exchange risk is borne by the depositor, the exchange rate volatility risk in unhedged FCNR(B) deposits is borne by the deposit-taking bank.