Citigroup, Axis bank Partner on India’s Leveraged Dollar Deposit Boom

Axis Bank has entered into an arrangement with Citigroup to support financing for non-resident Indians (NRIs) who put their money in foreign-currency deposits with the bank, as per The Bloomberg report. 

Under the arrangement, Axis Bank will provide standby letters of credit to support loans given by Citigroup through its overseas operations. This allows NRIs to get financing against the amount they have deposited with Axis Bank. 

How the Arrangement Works? 

An NRI can place money in a foreign-currency deposit with Axis Bank. Citigroup can then provide financing against that deposit through its overseas business. 

Axis Bank's standby letter of credit supports this financing. This means the money deposited by NRIs can also be used to get additional funding. 

RBI Wants More Dollar Inflows 

The arrangement comes after the Reserve Bank of India (RBI) introduced steps to attract more foreign-currency deposits from NRIs. 

The RBI wants to increase India's foreign-exchange reserves and reduce pressure on the rupee. 

The response has been strong. Deposits under the facility had reached $65.4 billion as of August 13, 2026, according to RBI data. 

RBI Cuts Deposit Scheme Period 

The RBI had earlier planned to keep its special swap facility open until September 30, 2026. However, after strong inflows, it brought the end date forward to August 31, 2026. 

The move shows how quickly NRIs responded to the higher returns and other benefits offered under the scheme. 

Axis Bank Offers Up to 6.40%  

Axis Bank is offering interest rates of up to 6.40% on Foreign Currency Non-Resident deposits. 

The RBI introduced a special swap facility in June to encourage these deposits. It also allowed Indian banks to issue standby letters of credit against such deposits, which made it easier for overseas banks to provide loans. 

Citi Still Focused on Institutional Business 

Citigroup sold its Indian retail banking business to Axis Bank in 2022. The latest arrangement does not mean Citi is returning to India's retail banking market. The bank continues to focus mainly on institutional customers in India. 

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Conclusion 

Axis Bank and Citigroup have joined hands to provide financing against NRI foreign-currency deposits. The arrangement comes as the RBI tries to attract more dollars into India, with deposits under the special facility already reaching $65.4 billion by August 13. 

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