State-owned Bank of India has mobilised $2.33 billion (approximately ₹20,000 crore) through Foreign Currency Non-Resident (Bank), or FCNR(B), deposits under the Reserve Bank of India's concessional swap facility. According to The Economic Times, this mobilisation will largely replace bulk deposits and provide liquidity sufficient to meet about three months of the bank's lending needs. A large share of the FCNR(B) deposits came from Singapore, Hong Kong and through the GIFT City route, with the final deposit number being close to twice what the lender had originally set out to raise. As per The Economic Times, the liquidity garnered through FCNR(B) will help the bank meet its lending requirements for roughly one quarter, while reducing its reliance on bulk deposits.
Bank of India plans to deploy the funds raised through FCNR(B) deposits by the end of the third quarter, as reported by Business Standard. The bank may not tap the certificate of deposit market over the next few months due to access to relatively cheaper funding through FCNR(B) deposits. Additionally, the bank is planning to raise about $1 billion through overseas foreign currency borrowings (OFCB) by December to benefit from the RBI's hedging subsidy. The bank is looking to raise funds through both a three- and five-year paper, with the target may change depending on pricing moves in the future. According to The Economic Times, the bank is unlikely to revise its credit growth target despite the huge surplus liquidity in the banking system caused by the mobilisation of the FCNR(B) deposit, maintaining its 15-17% credit growth target for the entire year.
The RBI's concessional swap window for FCNR(B) deposits, overseas foreign currency borrowings (OFCBs) and external commercial borrowings (ECBs) is valid until December 31. According to Mint, the RBI introduced the special USD-INR forex swap facility alongside its FCNR(B) announcement on June 5, which provides a 1.5% annual subsidy toward the cost of hedging foreign-currency funding, giving banks a benefit of 200 to 250 basis points on incremental OFCB borrowings. The FCNR(B) window, initially scheduled to remain open until September 30, was closed a month early on August 31 following strong inflows, ending the supply of cheap dollars. Banks are now looking at OFCBs to reduce their reliance on costly money-market funding. As per The Economic Times, the funds raised through FCNR(B) deposits will provide an additional source of stable foreign-currency funding for the bank and support its lending operations.
A consortium led by State Bank of India has agreed to provide approximately $3.5 billion of debt financing to Vodafone Idea Ltd. to help the mobile telephone operator rebuild its business. Other local lenders in the consortium include Union Bank of India Ltd. and the National Bank for Financing Infrastructure and Development. The funding, with a nearly 10-year tenure, includes conditions that billionaire Kumar Mangalam Birla remains as chairman throughout the loan period and guarantees of repayment in case of default.
Vodafone Idea's shares rose as much as 2% in Mumbai on Friday, compared with a 1% drop in the Sensex Index, following the debt financing announcement. The company, which is part-owned by the UK's Vodafone Group Plc, plans to use some funds to improve its network and better compete with Bharti Airtel Ltd. and Reliance Jio Infocomm Ltd. Vodafone Idea reported a smaller-than-expected loss of ₹3,750 crore ($394 million) in the first quarter through June. The government earlier this year provided Vodafone Idea with a lifeline by capping past spectrum payouts and converting about ₹37,000 crore of outstanding dues into equity, lifting its stake to 48.99% from 22.6%.
