First Abu Dhabi Bank (FAB), the UAE’s largest lender, is offering up to $1.5 billion in financing to support non-resident Indians (NRIs) investing in India’s foreign-currency deposit scheme, according to people familiar with the matter.
The bank is targeting Indian customers in the Middle East and is reportedly in discussions with Indian banks to arrange standby letters of credit that can support the funding. These guarantees ensure repayment if a borrower fails to meet their obligations.
FAB’s move comes as part of a broader effort by foreign and Indian banks to attract more foreign-currency deposits from NRIs. The initiative is aimed at strengthening India’s foreign exchange reserves and supporting the rupee, which has faced pressure in recent months. Analysts estimate that the scheme could bring in around $50 billion in deposits.
Under FAB’s proposed facility, NRIs can borrow against their foreign-currency deposits while benefiting from higher interest rates offered by Indian banks. The bank is offering leverage of up to nine times, meaning a customer investing $1 million in a deposit scheme could potentially receive a loan of up to $9 million, increasing the total deposit value to $10 million.
The UAE has emerged as a key market for India’s overseas deposit mobilisation efforts, as the country contributes a significant share of remittances sent to India by the global Indian community.
The initiative follows discussions between the Reserve Bank of India (RBI) and the Central Bank of the UAE to address challenges in attracting foreign-currency deposits. As part of the special scheme introduced in June, the RBI is covering the full hedging costs for Indian banks raising foreign-currency deposits for periods of three to five years.
The scheme is targeted at the global Indian diaspora, estimated at around 35 million people, one of the largest expatriate communities in the world. Several major lenders, including HSBC, Standard Chartered and State Bank of India, are competing to attract these funds by offering attractive interest rates on long-term deposits.
