Mumbai, Oct. 1 -- Some Indian banks are pitching a strategy that may let large companies raise dollar funding more cheaply-by borrowing in the domestic bond market first, then using a currency swap to convert that rupee debt into a dollar liability, three bankers and two fixed-income market participants said.

The plan is aimed at companies that already have dollar revenues or offshore operations, since they are better placed to absorb the currency exposure the swap creates. Discussions are ongoing with several corporates for three-five year borrowings, but no deal has been executed yet, three bankers said on condition of anonymity.

Here's how it works: First, a company raises rupee debt in the domestic bond market. It then enters a curr...