The State Bank of India (SBI) has raised more than $1.5 billion through foreign-currency deposits under a special programme launched for overseas Indians, according to people familiar with the matter. The initiative comes as Indian banks step up efforts to attract funds from the global Indian diaspora and strengthen foreign exchange reserves amid heightened economic uncertainties.

Under the programme, SBI is also offering leverage of up to nine times to depositors, allowing eligible customers to increase the amount of funds they can place through the scheme. The details of the facility remain private, according to sources familiar with the matter.

The fundraising drive follows a move by the Reserve Bank of India (RBI) in June, when it provided full hedging-cost support for banks raising three-to-five-year foreign currency deposits. The measure was introduced as part of broader efforts to strengthen foreign exchange reserves and provide banks greater flexibility in offering competitive interest rates to overseas depositors.

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Following the RBI’s decision, several Indian banks have increased their focus on attracting deposits from the country’s large overseas community. Financial institutions have expanded marketing activities and deployed relationship managers in major expatriate markets, including the Middle East, Singapore, and London, while some banks are offering interest rates above 7% on select foreign currency non-resident (FCNR) deposits.

According to provisional RBI data, total FCNR deposit inflows across the banking system stood at $166 million in April, compared with $272 million during the same period a year earlier. The data was recorded before the RBI announced the concessional swap facility, highlighting the rapid pace of SBI’s fundraising under the new programme.

SBI is offering interest rates ranging from 5.25% to 5.75% on three-to-five-year foreign currency deposits of up to $1 million, while larger deposits attract rates between 5.5% and 6%, according to the bank’s website. The latest move mirrors strategies used during the 2013 taper tantrum period, when India attracted around $34 billion through similar measures to support the rupee and boost foreign currency reserves.

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