Citigroup, Axis Bank partner to boost NRI dollar inflows

# Citigroup and Axis Bank Partner to Tap NRI Dollar Deposits

Citigroup has partnered with Axis Bank to create a new financing channel for non-resident Indians investing in foreign-currency deposits in India. The arrangement could help attract more dollar inflows from the Indian diaspora while giving global banks a new opportunity to participate in cross-border financing linked to NRI deposits.

Under the structure, Axis Bank will issue standby letters of credit to support financing provided by Citigroup through its offshore operations. This allows NRIs to potentially leverage funds held in foreign-currency deposits with an Indian bank while enabling overseas financing against those deposits.

The partnership comes as the Reserve Bank of India is taking steps to encourage greater foreign-currency inflows into the country. The central bank is seeking to strengthen India’s foreign-exchange reserves and support the rupee at a time when global financial conditions continue to influence currency markets.

In June, the RBI introduced a concessional swap facility designed to encourage Indian banks to attract Foreign Currency Non-Resident, or FCNR, deposits. The central bank also permitted Indian lenders to issue standby letters of credit against eligible deposits, allowing overseas banks to provide financing connected to those funds.

Axis Bank is offering interest rates of up to 6.40% on FCNR deposits. According to RBI data cited in reports, deposits mobilized through the facility had reached $65.4 billion by August 13. The strong response encouraged the RBI to move the facility’s closing date forward to the end of August from September 30.

For NRIs, the new arrangement could provide an additional way to make use of dollar savings while keeping those funds in foreign-currency deposits in India. The financing structure may be particularly attractive to wealthier diaspora investors who maintain substantial dollar-denominated assets.

The framework also creates opportunities for international banks with offshore private-banking operations. Such lenders can participate in financing linked to NRI deposits without operating a traditional retail banking network in India.

Indian banks can determine how much financing they are willing to support against eligible deposits, while overseas lenders can provide financing through their international operations. This creates a link between India's growing pool of diaspora deposits and global financial markets.

The partnership does not represent Citigroup's return to India's consumer banking business. Citi sold its Indian consumer banking operations to Axis Bank in 2022 and has since focused primarily on institutional and other businesses in the country.

The Citigroup-Axis Bank arrangement highlights how regulatory changes designed to attract foreign currency can create new financial products and cross-border lending opportunities. By allowing banks to leverage NRI deposits through offshore financing structures, the RBI's measures could increase the economic impact of funds brought into India's banking system.

As Indian banks compete to attract more FCNR deposits, partnerships with international lenders could become increasingly important. The latest arrangement therefore represents not only a new opportunity for NRIs but also another step toward connecting India's diaspora savings with global financing markets.