The swap allows companies to raise dollars abroad and convert them into rupees directly with the RBI | Photo Credit: simarik

‘Maharatna’ and ‘Navratna’ Central Public Sector Enterprises (CPSEs) are evaluating ways to tap overseas debt markets after the Reserve Bank of India (RBI) sweetened the terms for raising External Commercial Borrowings (ECBs) through a concessional swap facility.

People in the know told businessline that NTPC is evaluating various options for overseas borrowing under the new framework, while Indian Oil Corporation (IOC) is exploring the route in consultation with its banking partners. Steel Authority of India Ltd (SAIL), which currently has no ECB exposure, is also assessing the evolving landscape.

HUDCO has gone a step further. According to a report, the Navratna housing finance major has decided to raise $1 billion from overseas markets and plans to use RBI’s concessional forex swap facility for the purpose, which is a move aimed at lowering its overseas funding cost, while containing the currency risk that has traditionally kept PSUs away from foreign borrowings.

SAIL, another Maharatna, has not utilised any ECBs so far. However, “it continues to closely monitor and remain ready to adapt to any current or future policy measures introduced by the Central Government and the Reserve Bank of India (RBI),” a person in the know said.

The swap allows companies to raise dollars abroad and convert them into rupees directly with the RBI. It involves a hedging cost, which is normally 3 per cent or more, but under the new facility this drops to 1.5 per cent, a saving of 1–1.5 per cent.

People quoted above said the fully-hedged, landed cost of overseas borrowing is now attractive, often working out cheaper than domestic borrowing. Even so, given forex fluctuations, large CPSEs’ treasury departments are weighing the call on source of borrowing case by case.

Sources in the banking industry said the facility is likely to accelerate offshore fundraising and reduce dependence on domestic bank funding, supporting foreign currency inflows, while freeing up domestic banking system liquidity.

A research report by SBI said the concessional swap should ease the crowding-in of resource-raising by better-rated corporates locally, giving domestic capital markets, where yields have detached from policy rates, some breathing room, besides giving marquee Indian names better visibility as they entrench themselves in liquid global financial markets. PSEs had an 11 per cent share in India’s $43-billion ECB issuance during FY26, the report noted, and a favourable swap regime could accelerate borrowings during the window, which may have a soothing effect on the exchange rate curve, besides supporting planned capex and investments.

A Barclays India report said the facility offers PSUs further incentive to borrow in dollars and swap into rupees, similar to the 2013 RBI FX swap window, and may see an uptake of around $10-15 billion over the next few months, though elevated global rates will still act as a constraint on demand.

RBI Governor Sanjay Malhotra announced the concessional forex swap facility on June 5 as part of a broader package aimed at attracting foreign currency inflows. The subsequent June 8 circular operationalised a US dollar-rupee swap window for eligible ECBs raised by central and state government-owned PSUs. The facility is available at a fixed swap cost of 1.5 per cent per annum, compared with market hedging costs that are typically significantly higher.

Published on June 17, 2026