Citi- Axis Bank Arrangement
Under the arrangement, Axis Bank provides standby letters of credit to support financing offered by Citi through its offshore operations, according to people familiar with the matter. This allows eligible NRIs to borrow against the value of their foreign-currency deposits with Axis Bank.
The arrangement is notable because Citi exited India’s retail banking business after selling the operation to Axis Bank in 2022. Citi continues to focus on institutional and corporate banking, and the latest deal does not indicate a return to retail banking in India.
RBI’s Dollar Deposit Push
The development comes as the RBI’s special foreign-exchange swap facility has attracted strong demand. As of August 21, banks had mobilised $72.85 billion in foreign-currency inflows under the facility, including $65.4 billion through FCNR(B) deposits, according to RBI data.
The RBI introduced the facility in June to encourage dollar inflows and support India’s foreign-exchange position. It later advanced the FCNR(B) deposit deadline to August 31 from September 30 after strong mobilisation.
Axis Bank offers FCNR deposits with interest rates of up to 6.40%. The RBI also allowed banks to issue standby letters of credit against eligible deposits, creating a route for overseas lenders to finance clients without having a retail banking presence in India.
The growing use of such structures shows how the RBI’s dollar-mobilisation programme is creating new cross-border financing opportunities for Indian and international banks.
