ICICI Bank Launches $1.45 Billion Offshore Loan Amid RBI Push To Boost Dollar Funding

India's second-largest private sector lender, ICICI Bank, has launched a $1.45 billion offshore loan, capitalizing on a Reserve Bank of India (RBI) facility aimed at lowering the cost of hedging foreign-currency borrowings. This move follows a trend among Indian financial institutions opting for overseas funding to capitalize on the benefits offered by the RBI's new concession.

ICICI Bank, based in Mumbai, initially signed a $1 billion loan agreement with Bank of America, subsequently augmenting the loan through contributions from other international lenders such as Mizuho Bank, Mashreqbank, and United Overseas Bank. The four-year facility features a margin of 110 basis points over the U.S. benchmark Secured Overnight Financing Rate (SOFR).

Additional lenders may join the syndication, potentially expanding the loan size while maintaining the same pricing.

ICICI Bank's latest borrowing follows its $1 billion five-year bond sale last month, marking its return to international debt markets after nearly a decade. The transaction aligns with a surge in offshore fundraising by Indian banks, spurred by a series of measures announced by the RBI in June. These measures include a concessional foreign-exchange swap facility, enabling banks and state-owned enterprises to access foreign-currency swaps at a fixed annual rate of 1.5% if the average maturity is at least three years.

The concessional window remains open until December 31, prompting lenders to accelerate dollar-denominated fundraising efforts.

Since the RBI facility commenced on June 8, Indian banks have collectively raised around $2.58 billion through dollar bonds and loans, according to central bank data. ICICI Bank had previously contemplated an additional $500 million offshore bond issue to benefit from the RBI facility. The lender recently reported stronger-than-expected quarterly earnings, driven by a 20% growth in its loan portfolio.