Big institutions of the Indian banking and financial sector are preparing to raise capital from foreign markets. State Bank of India (SBI), Axis Bank, Bank of Baroda (BoB) and Power Finance Corporation (PFC) together are planning to raise about 2 billion dollars i.e. about 18 thousand crore rupees. The new swap facility of the Reserve Bank of India (RBI) will help these institutions in reducing costs. It is believed that many big issues can be seen in the foreign bond market from next week.
To avail the 1.5 percent fixed rate swap facility announced by the Reserve Bank of India on June 5, major banks and financial institutions of the country are preparing to raise funds through External Commercial Borrowing (ECB). Under this scheme, funds raised in foreign currency can be converted into rupees at low cost, which will reduce the total cost of borrowing.
SBI can raise up to 1 billion dollars
According to market sources, SBI is considering raising up to $ 1 billion next week. Being the largest government bank of the country, it is expected to have good interest from foreign investors. Whereas Axis Bank, Bank of Baroda and other institutions can bring small issues of up to $ 500 million in the initial phase.
Will benefit from MTN program
All these institutions already have Medium Term Note (MTN) programs. Due to this, it will not take much time for them to complete the documentary process for the new bond issue. Due to the ready investor base and pre-approved structure, these institutions can enter the market in a short time.
Recently, HDFC Bank had successfully raised capital by issuing five-year dollar bonds worth $750 million through GIFT City. This issue received good response from investors. The bank priced it at just 90 basis points above US Treasury yields, one of the lowest spreads for an Indian private bank.
Efforts to strengthen the rupee also
This swap facility of RBI is not limited to providing cheap funding only. Its objective is to strengthen the rupee by increasing foreign dollar inflow. The rupee, which was showing weakness at the beginning of the financial year 2026, has improved in recent times to reach the level of 94.32 per dollar. Experts believe that the Indian currency may get further support due to increase in foreign investment and dollar inflow.
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