ICICI Bank raises $17.9 billion through FCNR(B) window, boosts lending liquidity

Mumbai: ICICI Bank mobilised about $17.88 billion (Rs 1.70 lakh crore) through foreign currency non-resident, or FCNR(B), deposits under the Reserve Bank of India’s special swap facility up to August 31, the lender said. ICICI Bank’s mobilisation makes it one of the biggest beneficiaries of the RBI window.

The mobilisation gives the bank a sizeable pool of relatively longer-term foreign-currency funding that can be deployed towards loans. The RBI swap facility also reduces the currency risk associated with raising dollar deposits, making the funding more usable for banks to support credit growth without taking a large unhedged foreign-exchange exposure.

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Of the deposits raised, loans extended by the bank’s international branches and subsidiaries against such deposits stood at about $9 billion (Rs 85,600 crore), equivalent to roughly half of the total mobilisation.

The bank has also issued standby letters of credit (SBLCs) worth about $3.63 billion (Rs 34,600 crore) to other banks in respect of loans extended against these deposits.

Together, direct loans and loans supported through SBLCs amount to about $12.63 billion, or more than 70% of the FCNR(B) deposits mobilised by ICICI Bank, indicating that a substantial portion of the liquidity raised through the window has already been linked to lending.

Separately, ICICI Bank raised about $3.55 billion (Rs 33,800 crore) through US dollar-denominated bonds during July and August, according to disclosures made by the lender.

The mobilisation comes amid strong inflows into FCNR(B) deposits following the RBI’s decision to provide banks a swap facility aimed at attracting longer-term foreign-currency funding into the banking system.

Also Read: FCNR inflows may delay rate hikes, but banks face margin pressure: Report

Indian banks collectively mobilised $65.4 billion through FCNR(B) deposits by August 21, while overall foreign-currency inflows under the RBI’s facilities, including overseas borrowings, reached $73 billion, RBI data showed. The strong response prompted the RBI to advance the closure of the FCNR(B) window to August 31 from the earlier September 30 deadline.

The facility allows banks to mobilise dollar deposits from non-resident Indians and swap the foreign currency with the RBI, limiting foreign-exchange risk and improving their funding position. This provides banks additional liquidity that can be deployed towards loans, either directly through their overseas operations or to support credit to borrowers requiring foreign-currency funding, while easing pressure on their domestic deposit base.