Private banks in India are accelerating efforts to mobilise foreign currency deposits from non-resident Indians ahead of the Reserve Bank of India’s August 31 deadline, lifting rates and employing aggressive marketing tactics amid a shortened window.
Private banks in India are rushing to gather foreign currency deposits from non-resident Indians before the Reserve Bank of India’s concessional swap window closes on August 31, with lenders lifting rates, speeding up approvals and marketing the deadline aggressively on their websites.
According to Business Standard, the central bank cut short the window from an original end-September expiry after what it described as an encouraging response and a strong flow of foreign exchange. The move has turned what would have been a late-September push into an August scramble, with bankers saying customers who expected more time are now trying to act quickly.
Axis Bank, one of the biggest private sector lenders, has raised the rate on FCNR(B) deposits above $1 million to 6.40% for three- to five-year tenures, effective August 17. Federal Bank has made a similar move, lifting its rate to 6.40% from 6.25% on selected dollar deposits. HDFC Bank and ICICI Bank are still advertising 6.25%, while State Bank of India is offering 6% on deposits above $1 million with a five-year tenor, Business Standard reported.
Banks are also using more pointed sales tactics. HDFC Bank and ICICI Bank have added countdown timers to their websites to show NRI customers exactly how long remains to lock in current rates. ICICI Bank has also tapped overseas debt markets, raising $750 million through five-year dollar bonds, a sign that lenders may use quicker, cheaper funding to support further FCNR(B) mobilisation.
The competition comes after an initial surge in June, when several banks, including ICICI Bank, Axis Bank and Bank of Baroda, moved rates up to 6% soon after the RBI opened the special window. HDFC Bank has separately told customers that the temporary relaxation in rate ceilings and hedging-cost support both run to September 30, although the central bank has now shortened the swap scheme itself. Data cited by Business Standard shows banks had already mobilised more than $52 billion by August 13, and analysts think the total could still rise to $60 billion-$70 billion by month-end.
Senior bankers told Business Standard that the shorter deadline has created a sense of urgency across banks, clients and partner institutions. SBI Research has said mobilisation could reach $60 billion-$65 billion, while ANZ analysts Dhiraj Nim and Sanjay Mathur said the RBI appears to believe the scheme has already done most of its work and that keeping it open longer would probably add less value.
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