SynopsisHSBC has mobilised about $5.5 billion in non-resident Indian deposits by offering highly leveraged loans under the RBI's FCNR(B) window, outpacing global rivals. The strategy has helped attract diaspora wealth, contributing to the roughly $32 billion raised by Indian banks through foreign currency deposits.ReutersHSBC bank logo displayed on an office building in Mexico City as bank wins $5.5 billion of NRI deposits via leveraged strategyHSBC Holdings Plc has offered high leverage to capture about $5.5 billion so far in non-resident Indian deposits, helping it race ahead of some global rivals in the chase for diaspora wealth, according to people familiar with the matter.The London-based lender has extended more than $3.5 billion in loans to back the bespoke foreign currency deposit plans, allowing it to reel in the deposits through a special Reserve Bank of India concessional window, said the people who asked not to be identified because the information is private.Also read: Small, medium banks offer higher rates to attract NRI depositsUnder the structure of HSBC’s offering, a customer investing $100,000 in foreign currency non-resident deposits offered by any bank in India can borrow up to $1.9 million against a five-year deposit. This is expected to generate an annual return of about 14.25% while paying loan interest of 5.05% to 5.15%, according to a document reviewed by Bloomberg.That strategy has helped dwarf competitors such as Standard Chartered Bank Plc., which has garnered about $1 billion in similar deposits after adopting a more conservative lending stance, two other people familiar with the matter said, asking not to be named discussing information that isn’t public.HSBC has offered leverage of as much as 19 times the deposit, compared with about nine times at Standard Chartered, Bloomberg News has reported.The numbers highlight a widening divide in how international banks are capturing lucrative diaspora capital. HSBC has surged forward by capitalizing on its vast universe of wealthy clients and a footprint that spans from India’s GIFT City to Singapore, Hong Kong, and Dubai. The bulk of its inflows are going into five-year deposits, according to the people familiar with the matter.Other institutions are weighing similar moves. Some large foreign banks, including an Asian and a US lender, are pondering leverage policies amid fluctuating swap rates and have yet to start offering loans to offshore non-resident depositors, some of the people said.HSBC and Standard Chartered Bank did not reply to Bloomberg’s e-mailed queries seeking comment.The deposit push has provided a crucial external buffer to India. Banks have mobilized about $32 billion, largely through Foreign Currency Non-Resident, or FCNR(B), deposits, RBI Governor Sanjay Malhotra said.A majority of existing FCNR deposits which are going to mature in August and September will be renewed under the RBI’s new plan and will boost such inflows, Soumya Kanti Ghosh, group chief economic adviser at State Bank of India said in a note Monday. (Join our ETNRI WhatsApp channel for all the latest updates)...moreElevate your knowledge and leadership skills at a cost cheaper than your daily tea.Subscribe Now