The partnership centres on Foreign Currency Non-Resident (FCNR) deposits held with Axis Bank. Axis issues a Standby Letter of Credit, or SBLC, which provides a payment guarantee if obligations are not met. Citi’s overseas operations use that backing to extend loans to NRI investors.

Investors can then add the borrowed funds to their deposits, increasing the amount invested. The strategy seeks to benefit from the gap between deposit earnings and borrowing costs. Axis offers rates reaching 6.40% on these deposits, although the report does not state the interest charged on Citi’s loans.

The RBI permitted Indian banks to provide these guarantees as part of an effort to attract dollars, strengthen foreign exchange reserves and support the rupee. Deposits across the programme reached $52.3 billion by mid-August. Following the strong inflows, the RBI brought the special incentive window’s closing date forward to August 30 from late September.

For Citi, the tie-up offers access to NRI business without adding Indian branches. It follows the bank’s 2022 sale of its Indian retail operations to Axis. The arrangement does not signal a return to everyday retail banking: Citi continues to concentrate on institutional customers and wealthy individuals.