Kerala-based private lender Federal Bank Ltd has joined the surge of Indian banks tapping the dollar debt market through GIFT City's International Financial Services Centre (IFSC) Banking Unit. According to The Hindu BusinessLine, the bank is aiming to raise $500 million through a five-year dollar bond sale, making it the latest private sector lender to access overseas funds. The bankers noted that Federal Bank is keeping both private and public issue routes open due to limited time remaining for the fundraising process. This development comes as Indian lenders have raised an aggregate $9.3 billion through dollar bond sales since June 5, when the Reserve Bank of India announced a concessional swap facility for overseas foreign-exchange borrowings.
Recent market developments have forced major banks to reconsider their international fundraising strategies. As reported by The Economic Times, Yes Bank has withdrawn its dollar debt plan after investors demanded higher yields and as the deadline to raise foreign currency deposits through the special RBI swap window was very close. Federal Bank and RBL Bank have also postponed their dollar bond issuances as an oversupply of Indian bonds has increased investor demand for better returns, impacting the banks' ability to secure international funding at favorable terms.
The bank reported robust financial results for the April to June quarter, with Net Interest Income (NII) of ₹2,946 crore, representing a 26% increase from ₹2,336 crore reported during the same quarter last year. As reported by Business Standard, Federal Bank's standalone net profit for Q1 FY27 jumped 36.57% year-on-year to ₹1,176.93 crore, compared with ₹861.75 crore in the corresponding quarter last year. The bank's total income increased 6.24% YoY to ₹8,286.69 crore in Q1 FY27. The bank's Net Interest Margin (NIM) for the first quarter of the new FY was 3.33%, compared to 2.84% year-on-year.
According to the bank's disclosure, Gross NPA stood at 1.52% from 1.62% sequentially, while net Non-Performing Asset (NPA) slipped to 0.18% from 0.20% during the previous quarter. The net NPA figures stood at ₹506 crore, compared to ₹569 crore in the April quarter. As reported by CNBC TV18, provisions for the quarter stood at ₹317.7 crore from ₹741 crore in the previous quarter and ₹400 crore in the previous year.
The rush by Indian banks to access dollar markets follows the Reserve Bank of India's announcement of an early closure of a discounted foreign-exchange swap facility for non-resident deposits. As reported by The Hindu BusinessLine, banks are seeking to use the dollars raised from these borrowings to support non-resident deposits. Federal Bank operates through four segments: treasury, corporate or wholesale banking, retail banking, and other banking operations. As of June 30, 2026, the bank had 1,650 banking outlets and 2,135 ATMs/recyclers, including mobile ATMs. Following the announcement, shares of Federal Bank Ltd ended at ₹360.00, up by ₹4.25, or 1.19%, on the BSE on Friday, August 21, 2026, according to Business Standard.
