SBI, Axis Bank Among Lenders Set for $2 Billion ECB Fundraising via RBI Swap

SBI, Axis Bank Among Lenders Set for $2 Billion ECB Fundraising via RBI Swap

Major Indian banks, including State Bank of India (SBI), Axis Bank, and Bank of Baroda, alongside Power Finance Corporation, are poised to raise over $2 billion from overseas markets next week. This move leverages the Reserve Bank of India’s 1.5% fixed-rate swap incentive for external commercial borrowings (ECBs).

The RBI introduced the swap facility in March this year, aiming to encourage Indian companies to tap into foreign capital markets. Under the scheme, domestic lenders can raise funds at a lower interest rate by swapping their existing dollar-denominated debt with rupee-denominated securities.

According to market estimates, SBI and Axis Bank are expected to lead the fundraising efforts, followed closely by Power Finance Corporation and Bank of Baroda. The banks plan to tap into international markets, including London and Singapore, through various routes such as syndicated loans, bonds, and dollar-denominated term deposits.

The successful execution of this fundraising exercise will enable these lenders to replenish their foreign currency reserves, reduce their borrowing costs, and improve their capital adequacy ratios. Meanwhile, the RBI’s swap facility is seen as a strategic move to promote India’s economic growth by attracting foreign investment and providing a boost to the country’s external sector.

The RBI’s initiative has already generated significant interest among Indian companies, with many expected to follow suit in the coming weeks. As the fundraising efforts gain momentum, market analysts will closely watch the developments for any signs of improvement in the country’s economic indicators.

Source: original report.