Overview
- The Reserve Bank of India has agreed to absorb hedging costs on overseas dollar deposits, making foreign-currency FCNR(B) accounts cheaper for banks to raise.
- Axis Bank’s CEO said lenders expect substantial NRI inflows that analysts put at up to about $50 billion, with most funds likely from the Gulf and Southeast Asia.
- Banks plan to first cut or pause growth in high-cost domestic deposits before using new dollar funding to support loans and big projects.
- Executives expect the fresh funding to be channelled into infrastructure, data centres, commercial real estate and large capital expenditure while accelerating banks’ AI and digital spending.
- The move responds to a funding gap—RBI data showed loan growth outpacing deposit growth—and could lower banks’ funding costs, ease pressure on short-term instruments that were yielding over 7.5%, and boost credit availability for businesses and jobs.