Bank of Baroda (BoB) ranked a distant second, having raised $273 million so far, while Canara Bank and Punjab National Bank (PNB) mobilised $80 million each, said the sources cited above. The figures, representing foreign-currency resources mobilised until last Friday, were shared with the finance ministry at a meeting earlier this week.
Finance Minister Nirmala Sitharaman, earlier this week, had asked PSU banks to step up engagement with the Indian diaspora and launch innovative deposit products to attract overseas currency inflows. Bank executives told the ministry they are focused on securing foreign-currency resources before expanding FCNR(B) deposit mobilisation, a strategy that would give them greater flexibility to structure leveraged offerings for high-net-worth clients.
Total mobilisation by public-sector banks was below $3 billion until last Friday, although bankers said inflows have since accelerated after some lenders launched leveraged schemes to attract FCNR(B) deposits. Under such leveraged schemes, banks are charging about 5.8% on $9 million loan facilities, while offering around 6.5% on FCNR(B) deposits if customers bring in $1 million of their own funds. SBI, BoB, PNB and Canara Bank did not respond to ET’s requests for their comments.
Soon after the RBI unveiled the scheme in early June, several Indian lenders rushed to raise foreign-currency resources, driving up funding costs, ET reported on July 9. The increase in borrowing costs has since slowed efforts to offer leveraged deposit products.
SBI’s mobilisation of about $ 1.9 billion comprises a mix of bond issuances and FCNR(B) deposits swapped with the RBI. The lender, which has more than 240 overseas offices across 29 countries, was among the first to tap overseas bond markets after the scheme was announced. Among the private-sector lenders, HDFC Bank and Axis Bank have raised $750 million and $800 million, respectively, through bond issuances by their International Financial Services Centre Banking Units in GIFT City. The proceeds will be used to provide leverage against deposits raised from non-resident Indian customers, the people said.
Under the scheme, the RBI is absorbing hedging costs on banks’ three- to five-year foreign-currency deposits and allowing borrowing against these funds.