State-owned Indian banks are accelerating efforts to mobilise close to $30 billion through the Reserve Bank of India’s concessional foreign exchange swap window, in a rush to secure overseas funding before the scheme ends on September 30.
State-owned banks in India are pushing to raise almost $30 billion through the Reserve Bank of India’s concessional foreign exchange swap window, as lenders race to tap non-resident depositors and other overseas funding channels before the facility closes on September 30. Government data placed net inflows into Foreign Currency Non-Resident (Bank) deposits at $28 billion by July 30, underlining the scale of demand the scheme has already generated.
According to the figures shared in Parliament, foreign banks had mobilised $8.37 billion, private sector banks $10.73 billion and public sector banks $8.84 billion. HSBC was the biggest single lender in the pool with $6.14 billion, ahead of State Bank of India at $4.12 billion and ICICI Bank at $3.70 billion.
State Bank of India said on Friday that it had already raised nearly $6 billion and expected that figure to climb to about $10 billion by September. C S Setty, the bank’s chairman, told a post-earnings press briefing that the traction suggested more inflows were likely. He said SBI was helping non-resident Indian customers use their FCNR(B) deposits, largely through its own branches, particularly its GIFT City branch, and added that a standby letter of credit product was available but not yet widely used.
RBI data showed that total inflows across FCNR(B) deposits, overseas foreign currency borrowings and external commercial borrowings had reached $41 billion by July 31. Of that, $36.7 billion came through FCNR(B) deposits, $2.57 billion through overseas foreign currency borrowings and $1.5 billion through external commercial borrowings. The strong response has led several analysts to lift their forecasts, with many now expecting the swap window to draw close to $80 billion, while MUFG Bank has increased its estimate to nearly $90 billion from $60 billion.
Public sector lenders are now setting ambitious targets of their own. Bank of Baroda is aiming for $4 billion to $5 billion, with about $3 billion expected from FCNR(B) deposits. Bank of India is targeting about $3.2 billion, while Punjab National Bank and Canara Bank are each looking at around $2.5 billion. Indian Bank is seeking about $2 billion and Union Bank of India is aiming for $1.5 billion to $2 billion.
The RBI introduced the concessional swap facility in June as pressure on the rupee built from high crude prices, global risk aversion and persistent dollar demand. RBI Governor Sanjay Malhotra has said the central bank is not considering an early closure of the window and expects inflows to remain healthy after the strong start.
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