The lender expects to garner about $1 billion through FCNR(B) deposits, raise $1.5 billion through overseas borrowings under the RBI’s concessional swap facility, and facilitate another $1 billion of external commercial borrowings (ECBs) for corporate and public sector clients.
The bank expects the cost of its overseas borrowings to be below 6.5% whereas it has raised bulk deposits in the domestic market at about 7.1-7.15%.
“There is a clear cost advantage for borrowers. Besides diversifying funding sources, they could save around 50-60 basis points on borrowing costs,” Karnatak said., adding that highly rated public sector companies, which traditionally relied on rupee borrowings, are showing readiness to explore dollar funding.
The bank is exploring funding opportunities across multiple geographies, including the United States, Europe, Hong Kong, Singapore and Japan.
Despite the expected foreign currency inflows, the bank does not plan to revise its deposit growth guidance upward, as overseas funds are likely to substitute a portion of domestic bulk deposits rather than add to overall liabilities.
“When we raise FCNR(B) deposits, we can swap them into rupees. Therefore, we may not need domestic bulk deposits. It will largely be a substitution,” Karnatak said.Current and savings account (CASA) and retail term deposits together constitute 82% of the bank’s deposit base, with bulk deposits making up the remaining 18%.
FCNR(B) inflows could help lower the bank’s overall cost of deposits at a time when competition for low-cost CASA deposits remains intense across the banking sector.
FCNR(B) deposit inflows eased to $166 million in April 2026 from $272 million a year ago, according to RBI data. However, the outstanding FCNR(B) deposit base continued to expand, rising to $33.9 billion at the end of April 2026 from $33.1 billion a year earlier.
The RBI has recently rolled out measures to boost foreign inflows and reduce funding costs. It introduced a special swap facility and eased rate caps on FCNR(B) and NRE deposits to help banks attract foreign currency. It has also offered concessional swap support for public sector entities raising funds through ECBs. In addition, banks raising overseas funds can use a swap window at concessional rates, reducing hedging costs.