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Informist, Thursday, Aug. 27, 2026

 

--UCO Bank source: Plan to raise dollar bonds by end-Sept or mid-Oct

--CONTEXT: UCO Bank Mon approved raising $1 bln via medium-term note plan

--UCO Bank source: Giving leverage for FCNR(B) deposits through bridge loans

 

By Aaryan Khanna

 

NEW DELHI – State-owned UCO Bank is looking to issue dollar notes by the end of September or mid-October under its medium-term note programme, a senior bank official said. The bank's board on Monday approved a plan to raise up to $1 billion through debt instruments under the programme, joining lenders such as YES Bank and IDFC FIRST Bank that have recently operationalised similar programmes.

 

Banks are looking to raise dollar funds to leverage deposits under the Reserve Bank of India's special scheme for foreign currency non-resident (bank) deposits, under which deposits can be raised until Aug. 31. The central bank earlier this month curtailed the window by a month to Aug. 31 following strong reponse to its schemes to attract foreign capital, with inflows totalling over $65 billion between Jun. 8 and Aug. 21, according to latest data.

 

"We are not in a hurry to raise money in such a tight window (until the end of August)," the official told Informist. "FCNR(B) deposits are being leveraged through bridge loans and tie-ups with foreign banks, which is not the case only for us but for several others."

 

Leverage allows customers to earn higher returns while maximising deposit accretion for the bank. Bridge loans are allowing banks to borrow dollars bilaterally for a month or two for leverage before tapping the overseas market, the official said. UCO Bank started offering leverage on such deposits when it began operations at its Gujarat International Finance Tec-City branch on Aug. 10.

 

According to government data, UCO Bank's outstanding FCNR(B) deposits rose to $125.58 million on Jul. 30 from $18.17 million as of Jun. 5, just before the special scheme was launched. More recent data is not available.

 

The RBI is bearing the entire hedging cost on fresh three-to-five-year FCNR(B) deposits raised under the window, making it an attractive proposition for banks to shore up liabilities at a time when credit growth is at a multi-year high. UCO Bank is looking to raise up to $500 million through FCNR(B) deposits and overseas foreign currency borrowings until the RBI's special schemes end, Managing Director and Chief Executive Officer Rajendra Kumar Saboo had said on Jul. 22. 

 

Thursday, UCO Bank's shares ended 2.7% lower at INR 25.49 on the National Stock Exchange.  End

 

US$1 = INR 95.54

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Saji George Titus

 

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