Indian Banks Target Billions in Foreign Deposits to Stabilize Rupee

The Reserve Bank of India has established a special window, open until September 30, 2026, to replenish national foreign-exchange reserves and stabilize the declining rupee. To attract these funds, the central bank is absorbing the full cost of hedging for lenders raising three- to five-year deposits.

First Abu Dhabi Bank PJSC is offering up to $1.5 billion in funding to non-resident Indians in the Middle East, providing nine-times leverage to increase investments in Indian banks. This program targets the 35-million-strong Indian diaspora and could attract $50 billion. Other participating lenders include HSBC Holdings Plc, Standard Chartered Plc, and State Bank of India, with some deposits offering interest rates as high as 7.75%.

Simultaneously, Bank of India aims to raise $1.2 billion in Foreign Currency Non-Resident deposits and $2 billion through overseas borrowings. Managing Director and CEO Rajneesh Karnatak reported that the bank has already secured nearly $200 million from markets including the United States, Canada, United Kingdom, Singapore, Hong Kong, and Japan. The bank expects these deposits to reduce the cost of funds by 50-60 basis points compared to bulk deposits. Bank of India also reported a 36% year-on-year increase in first-quarter net profit to Rs 3,068 crore.