HSBC Buys $3 Billion in Indian Government Bonds

HSBC Holdings Plc purchased at least $3 billion in Indian government bonds since July, focusing primarily on the 5-year maturity bracket. The bank funded these acquisitions through the Reserve Bank of India's foreign currency non-resident program, a special diaspora dollar deposit scheme that allows lenders to swap dollars for rupees at concessional rates to eliminate currency risk.

HSBC has mobilized over $10 billion under this program, outpacing its global competitors. The Reserve Bank of India reported that banks have collectively garnered $65.4 billion through the diaspora deposit scheme.

This influx of foreign capital has supported the Indian rupee and reduced borrowing costs. Specifically, yields on 5-year government notes have dropped approximately 31 basis points since June 5.