ICICI Bank Ltd is set to raise its overseas borrowing capacity as it looks to tap international debt markets, the bank said in an exchange filing on Tuesday.
The private sector lender said its board, at a meeting scheduled for 18 July, will consider revising its fundraising limit through the issuance of bonds, notes and offshore certificates of deposit in overseas markets.
The announcement comes amid media reports that ICICI Bank is preparing to raise at least $500 million through a likely five-year bond issue.
RBI push
The bank would be the latest lender to take advantage of the Reserve Bank of India’s recent measures to attract foreign currency inflows.
On 5 June, as part of a broader package to attract dollar inflows and support the Indian rupee, RBI allowed banks to raise fresh and renew existing Foreign Currency Non-Resident Bank (FCNR-B) deposits for three to five years and swap the dollars with the central bank at a concessional rate.
Under the revised framework, RBI will bear the hedging cost for eligible foreign-currency borrowings by banks and public sector companies, effectively reducing it to zero for lenders and lowering the overall cost of raising funds overseas. The scheme is open till 30 September.
The measures are aimed at supporting foreign currency inflows, easing funding costs and deepening India’s external financing avenues.
Banks have largely been using these overseas borrowings to mobilize foreign currency resources, which can then be deployed into FCNR (B) deposits and other foreign currency assets, allowing them to benefit from the regulatory relaxations.
HDFC Bank and Axis Bank have already tapped overseas markets following RBI’s announcement. However, State Bank of India and Bank of Baroda shelved their planned overseas bond issuances after a sharp rise in global borrowing costs eroded the economics of such fundraisings.
The window for overseas fundraising has narrowed in recent weeks as US Treasury yields climbed, pushing up dollar funding costs globally. The spike followed heightened geopolitical tensions after US President Donald Trump said that the ceasefire deal with Iran was “over”, triggering a sell-off in US government bonds.
Higher Treasury yields directly translate into increased borrowing costs for Indian issuers raising dollar-denominated debt.