Kotak Mahindra Bank Raises $650 Million in Dollar Bonds Ahead of RBI Swap Window Closure

Kotak Mahindra Bank Taps Dollar Debt Market

Kotak Mahindra Bank has raised $650 million through five-year U.S. dollar-denominated bonds, joining a growing group of Indian lenders seeking overseas funding before the Reserve Bank of India’s special swap window closes.

The bonds carry a 5.478% coupon, priced at 108 basis points above the five-year U.S. Treasury benchmark. Strong investor demand allowed the bank to price the transaction 27 basis points below its initial price guidance, signalling healthy appetite for Indian bank debt.

Kotak Mahindra Bank is the sixth Indian lender to raise dollar funds through bonds under the discounted swap facility. Indian lenders have collectively raised about $6.95 billion since June 5, highlighting the rapid acceleration in offshore fundraising.

RBI Swap Window Drives Fundraising Rush

The fundraising comes after the RBI decided to close its special foreign-exchange swap facility on August 31, a month earlier than previously planned. The facility was introduced to support foreign-currency inflows and offered banks a more attractive hedging route for eligible foreign-currency borrowings.

Other private lenders, including YES Bank, IDFC First Bank and Federal Bank, have also been accelerating dollar bond plans. Together, the four banks had targeted around $1.85 billion in offshore borrowing. ICICI Bank and Axis Bank have already raised more than $1 billion through similar transactions.

The rush reflects banks’ efforts to diversify funding sources and secure relatively efficient overseas financing before the RBI facility expires. The latest transactions also demonstrate continued international investor confidence in India’s banking sector.