Banks to retire high-cost funds with diaspora money, says Axis Bank chief

File pic: Amitabh Chaudhry, Managing Director & Chief Executive Officer, Axis Bank

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Lenders will use foreign-currency deposits raised from the Indian diaspora in the next few months to replace expensive funds on their books before channeling money to companies, according to the chief executive officer of Axis Bank Ltd., the country’s third-biggest private bank by assets.“The first thing banks will do is reduce or pause growth in other very expensive deposits for some time,” Amitabh Chaudhry told Bloomberg News in an interview. Following that, the quickest areas for deployment would be across infrastructure projects, data-centre investments, commercial real estate and large capital-expenditure plans, he said.Indian banks are taking advantage of a move this month by the Reserve Bank of India to absorb the hedging costs incurred by lenders that raise dollars overseas. The measure gives banks more room to offer attractive rates on foreign currency deposits, part of a broader effort by policymakers to boost foreign capital inflows and support the rupee.Bank shares have rallied in recent weeks following the announcement, as investors bet the regulator’s support will help increase lenders’ margins and feed into profits. The move is expected to draw in about $50 billion from abroad, according to analysts and economists. Chaudhry expects most of the foreign deposits to originate from the Gulf region, followed by South-East Asia. The foreign deposit plan also provides relief to lenders that are grappling with an unfavourable deposit-to-loan ratio. Loan growth has outpaced deposits, with lenders having to raise certificates of deposit rates as high as 7.5250% for three-month paper issued in March.Loans expanded 18% in the two weeks ended May 31, the fastest pace in almost two years, according to central bank data. Deposits grew 12% over the same period. Chaudhry, 62, took over as CEO of Axis Bank in January 2019 and helped the bank complete the acquisition of Citigroup Inc.’s consumer business in India. The bank has assets of more than 18 trillion rupees ($191 billion), trailing only HDFC Bank Ltd. and ICICI Bank Ltd. among private peers.Chaudhry has also overseen accelerated investments in digital platforms across the bank, helping the stock more than double since he took over. Axis’ shares have, however, trailed larger peers like State Bank of India and ICICI Bank during that period.Axis Bank has earmarked about 15% of its technology budget for artificial intelligence this year, reflecting a broader push into tools it expects to transform customer acquisition and workforce planning, he said.Spending on AI is expected to rise multi-fold in the coming years, Chaudhry said, underscoring how the Mumbai-based lender is looking to gain an edge as banks increasingly seek technological edge over peers.“If we can understand, use and implement AI well — internally and externally — we can create a difference between us and competition,” Chaudhry said, adding that the bank has hired a Chief AI officer to lead the vertical.More stories like this are available on bloomberg.com©2026 Bloomberg L.P.Published on June 29, 2026