South Indian Bank targets $1 billion in foreign deposits as RBI absorbs hedging costs

South Indian Bank is targeting inflows of up to $1 billion through fresh Foreign Currency Non-Resident (B) deposits by the end of September 2026.

The Thrissur-based lender is accelerating its fundraising efforts following a policy shift by the Reserve Bank of India (RBI) that significantly improves the economics of such deposits for foreign investors.

The central bank has agreed to bear the full hedging cost for new 3- to 5-year FCNR (B) deposits raised until September 2026.

This subsidy effectively neutralizes the currency risk for non-resident depositors, making Indian bank deposits more competitive against global alternatives.

The move is part of a broader RBI strategy to bolster dollar inflows and stabilize foreign exchange reserves amid ongoing global volatility.

For South Indian Bank, the opportunity represents a substantial boost to its foreign currency funding base.