Indian banks and NBFCs ramp up dollar borrowings amid regulatory curbs

Indian banks and non-banking finance companies (NBFCs) are increasing their reliance on dollar-denominated loans amid stricter domestic regulations and a slowdown in offshore loan activity.

Bank of India recently raised $400 million through a dollar syndicated loan, marking its first such transaction since 2012. Strong investor interest, driven by the rarity of the deal, allowed the bank to expand the facility by $100 million through a greenshoe option. The loan, raised via its Gujarat International Finance Tec-City (GIFT City) branch, was equally split into three- and five-year tranches, attracting 22 lenders, including CTBC Bank and Standard Chartered.

This development comes as India’s foreign-currency loan market, which had seen a 30% year-on-year decline to $3.2 billion in 2025 so far, shows signs of revival. Earlier this year, State Bank of India secured the largest dollar-denominated syndicated loan from India, raising $1 billion, although it opted not to exercise its $250 million greenshoe option. Bank of Baroda also tapped offshore markets, securing a $750 million term loan from eight lenders.

NBFCs raising funds

NBFCs, particularly large players like Shriram Finance Ltd, are actively seeking dollar loans. Shriram Finance is in talks to raise up to $250 million via a three-year facility, supplementing its record $2 billion in offshore borrowings for the financial year ending March 31, 2025.

NBFCs were the biggest borrowers this year at $16 billion in 2024, more than 50% of foreign currency loans and bonds raised by Indian companies.

Meanwhile, Mukesh Ambani’s Reliance Industries Ltd. is pursuing a dollar loan of up to $3 billion, further highlighting growing interest from Indian corporates in accessing offshore debt. The increased activity in global credit markets reflects confidence in India’s economic stability, supported by improving economic indicators, liquidity measures from the Reserve Bank of India, and expectations of an interest rate cut.

With NBFCs and banks increasingly turning to offshore markets, dollar loans are poised for a resurgence, offering a viable funding option as domestic regulations tighten.