India’s largest bank, SBI, is set to mobilise approximately $10 billion via Foreign Currency Non-Resident deposits by September, leveraging a Reserve Bank of India swap facility that has significantly lowered fund-raking costs and attracted overseas investments.
State Bank of India expects to mobilise about $10 billion through Foreign Currency Non-Resident deposits by the end of September, as India’s biggest lender taps a Reserve Bank of India swap facility that has sharply lowered the cost of raising such funds, chairman C.S. Setty said on Thursday. He said SBI had already raised almost $6 billion since June 8 and had “good visibility” on further inflows, even though the bank has not set a formal target.
The RBI reopened the concessional window in June and agreed to absorb hedging costs on foreign-currency deposits raised by Indian banks until September 30, a move designed to draw overseas money into the banking system and support liquidity. Industry reports in June showed that SBI, Bank of Baroda and several private lenders quickly lifted FCNR deposit rates to as much as 6% on dollar balances, making the product more attractive to non-resident Indians.
Setty said SBI is offering leverage support to NRI customers through its branches and its GIFT City operation, while also using a standby letter of credit product, though that route has so far seen limited use. He said the bank has raised $1 billion through overseas foreign-currency borrowing, but added that securing FCNR deposits remains the first priority.
The SBI chief said the inflows would improve visibility on liquidity and reduce the bank’s reliance on bulk deposits, while its surplus statutory liquidity ratio securities, which he put at ₹3.09 lakh crore, give it room to fund loan growth. He expects that surplus SLR stock to rise to about ₹4 lakh crore, and said deposit growth of 10% to 11% should be enough to support credit growth of 14% to 15%. Setty also said SBI did not expect to change interest rates on FCNR deposits.
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