The Reserve Bank of India (RBI) announced a 25.8% increase in Indian companies’ requests to raise funds through external commercial borrowings (ECB) in May, totaling over $4.73 billion. The data released by the central bank for May revealed a rise from $3.77 billion in April in ECB filings, including Foreign Currency Convertible Bonds (FCCB) and Rupee Denominated Bonds (RDB) under both automatic and approval routes.
Leading the borrowing intent, the Indian Railway Finance Corporation Limited proposed over $1.11 billion, with NTPC filing for $750 million. Public sector banks (PSBs) and financial institutions recently informed Finance Minister Nirmala Sitharaman about the positive response from Non-Resident Indians (NRIs) to increased interest rates and incentives on foreign currency deposits, ECBs, and Overseas Foreign Currency Borrowings (OFCBs) swap initiatives.
Banks anticipate a rise in NRI funds inflow, emphasizing enhanced engagement with the Indian diaspora. Sitharaman urged banks to expand outreach, introduce innovative deposit products, and sustain momentum in mobilization efforts. PSBs highlighted offering attractive returns on FCNR (B) deposits, supported by the removal of interest rate ceilings on fresh FCNR(B) deposits.
Moreover, banks have implemented tailored strategies, including digital platforms, to connect with NRIs and boost deposit collection. The mobilization of FCNR(B) deposits has shown a growing trend, driven by appealing returns offered by banks. The schemes introduced by the RBI Governor on June 5 aim to attract foreign capital, fortify the balance of payments, and encourage capital inflows through initiatives like US Dollar-Rupee forex swap and concessional swap facilities for eligible ECBs and OFCBs.
