Federal Bank, Kerala-based private sector banking lender, aims to garner over $100 million from FCNR deposits capitalizing on the swap facility extended by RBI for a limited time. With fund mobilization to the extent of $70 million, the bank aims to raise another $30 million by the month ending November.
With request from the part of banks on an ongoing basis for providing concessional swap window on fresh FCNR(B) deposits, RBI granted the facility for fresh deposits raised for a minimum tenure of over 3 years to be swapped at a discounted rate of 3.5% on an annual basis. For more details on the swap facility for FCNR (B) click here.
In one of the business channels, Senior Official of the bank was quoted as saying " FCNR still remains a small portion of deposits for the banks". The bank began to promote and raise FCNR (B) deposits after the RBI provided the swap window as incentive to the banks. Further, such funds are reported to be used for.. "The funds will be primarily used for export credit and foreign currency requirement of our clients. After swapping, the average cost comes to 8.75 per cent" by Mr. Srinivasan.
However as asserted in one of the media reports Shyam Srinivasan, Managing Director of the bank was quoted as saying "Our focus continues to remain on rupee deposits".
As per the Business Standard report, YES Bank was the first to leverage the swap facility and succeeded in raising as much as $225 million via a dual-currency multi-tenure syndicated loan facility. Other private banks, including HDFC Bank, ICICI Bank among others are also gearing to mobilize funds from the overseas market to use the SWAP window kept open by the RBI only until the November 30, 2013.