MUMBAI: Banks are accelerating foreign-currency bond and external commercial borrowing after RBI closed its FCNR(B) deposit swap facility a month ahead of schedule, while its June 6 facility for ECBs and other offshore foreign-currency borrowings remains open until the end of Sept.
Under the facility, banks could raise eligible foreign-currency funds, including through ECBs and overseas bonds, and swap them with RBI for rupees for a fixed period.
The arrangement allowed lenders to lock in the cost of converting the funds into rupees and was intended to support domestic liquidity.The FCNR(B) deposit window was originally scheduled to remain open until the end of Sept.
RBI, however, closed it a month early.
The facility for ECBs and offshore foreign-currency borrowing continues until the end of Sept, prompting banks to accelerate their fundraising plans.Other private lenders looking to raise funds include Kotak Bank, Yes Bank and Federal Bank.
