Banks ride RBI swap to raise $12 bn from overseas

Meanwhile, the Economic Times daily newspaper is available online now.

Key points

• Overall, $17 billion of total debt raised in 2026 from India is on track to surpass the $22 billion garnered in 2021 – and dwarfs the $5 billion raised in 2025.
• (Catch all the Business News, Breaking News and Latest News Updates on The Economic Times.).
• HDFC Bank raised $1.75 billion Thursday, the largest by any Indian bank, in an matter that followed the $750 million the country's most-valued lender had raised in June.
• "The amounts raised by the sector shows the strength of Indian banking, " Rakshit remarked.
• But the apparent supply glut from India hasn't come at a steep cost.

Meanwhile, the Economic Times daily newspaper is available online now. Banks ride RBI swap wave to raise $12 billion via overseas debt. Banks ride RBI swap wave to raise $12 billion via overseas debt. ET BureauLast Updated: Aug 22, 2026, 12: 04: 00 AM IST.

This week was the busiest for forex debt issuance by Indian lenders. ICICI Bank, Kotak Mahindra Bank, IDFC First Bank, HDFC Bank and Bank of Baroda together raised a massive $4.4 billion, and the bulk of the proceeds may be applied to assist fund the leverage for foreign currency non-resident (bank) deposits.

Mumbai: Indian banks have already raised an eye-popping $12 billion abroad this year, taking advantage of the central bank's one-time swap facility, and global appetite for top-notch local banking papers should support lenders raise even more funds at competitive rates ahead of the August 31 deadline for special forex deposits, bankers stated. Overall, $17 billion of total debt raised in 2026 from India is on track to surpass the $22 billion garnered in 2021 – and dwarfs the $5 billion raised in 2025. This week was the busiest for forex debt issuance by Indian lenders. ICICI Bank, Kotak Mahindra Bank, IDFC First Bank, HDFC Bank and Bank of Baroda together raised a massive $4.4 billion, and the bulk of the proceeds may be applied to assist fund the leverage for foreign currency non-resident (bank) deposits.

FCNR-B deposits booked by August 31 qualify for the swap backing.

HDFC Bank raised $1.75 billion Thursday, the largest by any Indian bank, in an matter that followed the $750 million the country's most-valued lender had raised in June. IDFC First and BoB both upsized their previous problems adding $100 millon and $400 million, respectively, on Friday as banks continued to pile up the cash. Live Events.

Tata, Godrej and now Birla: Major groups aren't just chasing glitter Arup Rakshit, head, treasury, HDFC Bank, stated the funds raised would underpin leverage to clients and additionally assist fund customers abroad. "The amounts raised by the sector shows the strength of Indian banking, " Rakshit remarked. "The demand for our bonds is an endorsement for HDFC Bank's credit quality, " he remarked. Of the $12 billion raised by banks, $10 billion was garnered after the Reserve Bank of India (RBI) confirmed on June 5 the special dispensation for drawing deposits and other forex-inflow programmes. Tight Spreads.

But the apparent supply glut from India hasn't come at a steep cost. Vinod Venkatesh, co-head, financing solutions, HSBC India, remarked despite this heavy supply in a short span of time, spreads on Indian bank bonds are only around 5 basis points wider versus what they were at the beginning of the year and remain as tight as ever. "Initial concerns around oversupply seem to have faded, as investors have focused more on the sector's underlying credit strength, and many now see this as a rare window of opportunity to add exposure to the Indian banking sector, " Venkatesh remarked. One basis point is a hundredth of a percentage point. Private credit deals drop 61 pc to USD 3.5 bn in H1 2026: Report Gaurav Bhagat, head of financial institutions, South Asia, MUFG, remarked despite the sudden surge in supplies, investors have responded favourably with deals getting oversubscribed on an average 2.89 times. "Despite the volatility in US treasuries, all the deals have performed in the secondary market, leaving the international investors with an overall positive experience. This constructive market backdrop bodes well for issuers, " Bhagat remarked. MUFG expects supply to continue, with an incremental $5 billion to $7.5 billion of issuance until the end of the year. According to HSBC's Venkatesh, once the FCNR(B)-related concessional swap window closes, bond supply from the Indian banking space could drop materially, though activity will remain. "Some borrowers that applied short-term funding to utilise the window may return to the bond market afterwards to refinance, so we expect select, need-based issuances through the rest of the year. Furthermore, the other concessional swap window of 1.5% expires in December. It could additionally backing further activity, " he noted. "Finally, we could continue to see issuance from corporates and the NBFC space, which sits outside the two concessional swap windows." Add Now!

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Taken together, the developments around banks ride RBI swap to raise $12 bn from overseas point to a situation that is still moving, and the coming days should bring more clarity.