Bank of India Eyes $1B Overseas Borrowing by December

(BoI), a state-owned lender, intends to raise about $1 billion through overseas borrowings by December 2026. The move is designed to leverage the Reserve Bank of India’s (RBI) subsidy scheme that reduces the cost of hedging foreign currency borrowings. Previous Mobilization: Earlier, BoI successfully raised $2.2 billion via the RBI’s Foreign Currency Non-Resident Bank [FCNR(B)] deposit window. This exceeded its initial target, with significant inflows coming from Singapore, Hong Kong, and India’s GIFT City. The funds are expected to be deployed by the third quarter of FY27. Closure of FCNR(B) Scheme: The FCNR(B) deposit scheme, which fully covered hedging costs, was closed on August 31, 2026—one month earlier than planned. This ended the supply of cheap U.S. dollars, prompting banks to explore alternative concessional borrowing routes. Alternative Facilities: The RBI has kept open the External Commercial Borrowing (ECB) and Overseas Foreign Currency Borrowing (OFCB) windows until December 31, 2026. These facilities offer a 1.5% annual subsidy on hedging costs, typically ranging between 3.5% and 4%, effectively reducing expenses by 200–250 basis points. Industry-Wide Participation: Several banks—including Punjab National Bank, Bank of Baroda, Axis Bank, RBL Bank, Federal Bank, Canara Bank, UCO Bank, Bank of Maharashtra, and IndusInd Bank—are reportedly in early discussions to tap into the OFCB facility. Scale of Inflows: Collectively, Indian banks mobilized a record $127.22 billion through FCNR(B) deposits, alongside $5.26 billion via OFCBs and $3.89 billion through ECBs. The combined inflows reached $136.37 billion, underscoring the strong appetite for RBI-backed concessional borrowing schemes.