Mumbai, Sept. 9 -- Indian banks are seeking longer-term overseas funding to replace short-term borrowings used during a rush to raise $127 billion through the Reserve Bank of India's (RBI) special FCNR(B) deposit scheme, according to five treasury officials.

Several lenders turned to short-term borrowing to bridge the gap while arranging longer-term funding for FCNR(B) deposits, the officials said. They are now looking to replace those short-term liabilities with longer-term overseas borrowings, which would reduce their reliance on money-market funding as the existing borrowings come due.

Punjab National Bank, Bank of Baroda, Axis Bank, RBL Bank, Federal Bank, Canara Bank, UCO Bank, Bank of Maharashtra and IndusInd Bank are in early tal...