These financial institutions are raising money overseas to take advantage of the 1.5% fixed rate swap provided by the Reserve Bank of India (RBI) on external commercial borrowings (ECBs).
The central bank had announced the swap incentives during its last monetary policy review (MPC) meeting held on June 5.
Also Read: HDFC raises $750-m ECB, first under RBI’s special swap plan
Bankers familiar with the fundraising said financial institutions with ready medium-term note (MTN) programmes will have an advantage as they would have a ready investor base to approach for the latest ECB tranche.
“We will see the first busy period for ECB fundraising next week. HDFC Bank kicked off the fundraising and now the other large Indian bank, SBI, will also join in and it could be as early as Monday,” said a banker involved in these deals.
“If the market conditions are good and there are no surprises, we expect at least one large issue everyday between Monday and Thursday,” said the banker cited above.SBI, given its size and expected investor interest in India’s most valued state-run entity, could raise up to $1 billion provided market conditions are conducive next week, said the banker cited immediately above.
Other banks could look for smaller amounts — may be issues of up to $500 million — as they do not want to overextend in the first instance itself, said a banker.
“All these banks as well as PFC have running MTN programmes, which they can tap at a short notice. This gives them an advantage as they have the documents ready and can arrange to hit the markets without delay or permissions,” said another banker involved in the issues.
Also Read: RBI opens a dollar swap window to help hedge foreign borrowings
The ECB incentives are part of a broader suite of measures aimed at undergirding the rupee, which slid about a percentage point on average per month since the start of FY26. The rupee, which fell close to 97 a dollar, has since recovered to 94.32 per dollar on expectations of a peace deal in West Asia and higher dollar inflows.
Approved Plans
The executive committee of the SBI central board, for instance, had approved a $2-billion MTN programme for the current fiscal year in May. Similarly, PFC, too, has a running $8 billion MTN programme.
The individual banks cited above and PFC did not respond to ET’s mailed queries seeking their comments on the proposed ECBs until the publication of this report.
HDFC Bank’s successful dollar bond sale earlier this week has also pushed its peers to take advantage of the fine pricing. On Tuesday, HDFC Bank raised $750 million by selling five-year bonds to overseas investors through the GIFT City facility. The bond was the bank’s first overseas issue since February 2024 and was priced at 90 basis points above the five-year US treasury, the tightest spread over the US benchmark for any private sector bank in India.
In a bid to attract overseas dollars, RBI announced a special swap arrangement on June 5. The swap is open for both banks and public sector enterprises.