Indian Bank to Raise $400 Million via ECB Amid RBI’s Concessional Swap Window

Indian Bank is set to tap into the Reserve Bank of India’s (RBI) concessional swap window to raise $400 million through External Commercial Borrowings (ECB) this week, in a bid to support its business growth.

Indian Bank to Raise $400 Million via ECB This Week

According to Indian Bank MD and CEO Binod Kumar, the bank is planning to raise $400 million via the ECB route as early as this week, which would come at a very competitive rate.

The bank aims to garner $1 billion from the ECB and about $2 billion via Foreign Currency Non-Resident (Bank) or FCNR (B) deposits, as part of its overall fundraising plan.

Indian Bank’s ECB Fundraising Strategy

The bank’s decision to raise funds via ECB comes as the RBI has extended the deadline for FCNR (B) deposits to December 31, 2026, providing Indian Bank with a window of opportunity to tap into the market.

Kumar stated that the bank has already raised $1.5 billion from FCNR (B) deposits, with NRIs showing a willingness to invest in the product due to its attractive returns.

Market Impact and Details

• The RBI has introduced a special USD-INR forex swap facility, covering FCNR (B) deposits with a deadline of September 30, while December 31 for ECBs and Overseas Foreign Currency Borrowings (OFCBs).
• As per RBI data, FCNR (B) has attracted $52.3 billion from overseas customers, while OFCBs contributed $2.81 billion and ECBs $1.74 billion till August 13.
• The RBI prematurely closed the window for mobilising FCNR (B) deposits under its special USD-INR forex swap facility citing the encouraging response and strong forex inflows generated through the scheme.

Key Takeaways

• Indian Bank plans to raise $400 million via ECB this week to support its business growth.
• The bank aims to garner $1 billion from the ECB and about $2 billion via FCNR (B) deposits.
• The RBI has extended the deadline for FCNR (B) deposits to December 31, 2026, providing Indian Bank with a window of opportunity to tap into the market.

FAQs

What is External Commercial Borrowing (ECB)?

External Commercial Borrowing (ECB) refers to the borrowing of funds by an Indian company from a non-resident lender, such as a foreign bank or a non-resident individual.

What is Foreign Currency Non-Resident (Bank) or FCNR (B) deposit?

Foreign Currency Non-Resident (Bank) or FCNR (B) deposit refers to a type of deposit that can be made by a non-resident Indian in a foreign currency, which is then converted into Indian rupees.

What is the RBI’s concessional swap window?

The RBI’s concessional swap window refers to a special facility introduced by the RBI to allow Indian banks to borrow foreign currency at a concessional rate, which can then be used to fund their business activities.

Conclusion

Indian Bank’s decision to raise $400 million via ECB this week is a strategic move to support its business growth and tap into the RBI’s concessional swap window. As the bank continues to play a meaningful role in building a stronger and more prosperous nation, it remains committed to strengthening financial inclusion, empowering communities, and contributing to India’s journey towards a stronger, more inclusive, and prosperous future.