SBI, ICICI say no to RBI's dollars

The country’s two largest banks do not need to borrow dollar funds from the Reserve Bank of India’s (RBI) special window that was provided on Friday. Both State Bank of India (SBI) and ICICI have excess liquidity in their overseas branches.

“As far as forex liquidity is concerned, we are positive. We are actually placing money overseas. If you look at our asset-liability match, as far as our dollar balance sheet is concerned, we are quite well matched in the medium- and long-term,” SBI Chairman O P Bhatt said today.

Similarly, ICICI Bank Joint Managing Director and Chief Financial Officer Chanda Kochhar said, “The bank’s overseas branches and subsidiaries have robust, excess liquidity and so we have not borrowed (from RBI).”

The bankers were speaking on the sidelines of a banking seminar, organised by the Federation of Indian Chambers of Commerce And Industry (Ficci) and the Indian Banks’ Association (IBA).

On Friday, RBI had allowed banks to borrow foreign exchange via swaps for utilising the proceeds in their overseas branches. These FX swaps have been offered for up to a 3-month tenure, after which the bank will have to return the fund to RBI. However, many other banks may need to access this dollar window, Bhatt said.

Many banks had approached the central bank to get dollar liquidity for their overseas operations following the drying up of lines of credit globally. Although almost all state-owned banks have announced a cut in their benchmark prime lending rates (PLRs) by 75 basis points, none of the leading private sector banks has taken any such decision.

ICICI Bank, the country’s largest private sector lender, is yet to take a decision and is monitoring the market condition on a daily basis, Kochhar said.