Foreign Currency Non-Resident (Bank) or FCNR(B) deposits could see mobilisation of up to $70 billion, potentially improving liquidity conditions and providing relief to Indian banks, according to global brokerages.
Brokerages including Jefferies, UBS and Macquarie said the initial response to the Reserve Bank of India’s FCNR(B)-related measures has been stronger than anticipated, indicating increased confidence among overseas depositors.
Jefferies said its discussions with banks suggest that most of the inflows represent fresh funds rather than existing deposits being shifted between accounts. The brokerage noted that deposits are largely being sourced from financial centres including the UAE, Singapore and Hong Kong through banks’ international networks and partner institutions.
According to Jefferies, FCNR(B) mobilisation of around $50 billion to $70 billion would be a major positive for the banking sector, provided current returns remain attractive enough to support continued deposit growth.
The brokerage added that improved liquidity conditions are expected to benefit non-banking financial companies (NBFCs) and smaller private sector banks, which could emerge as attractive investment opportunities as funding pressures ease.
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UBS also reported strong momentum in foreign currency mobilisation. The brokerage said Indian banks have already raised around $1.97 billion through the External Commercial Borrowing (ECB) swap facility and another $1.34 billion through the Overseas Foreign Currency Borrowing (OFCB) swap window.
These inflows, UBS noted, are ahead of expectations outlined by several banks during their recent earnings discussions. Large private sector lenders have indicated that the pace of mobilisation could increase further in the coming weeks, supporting funding availability and credit expansion.
Macquarie also described the latest FCNR(B) deposit trends as a positive development for the Indian banking sector. The brokerage said increased participation from foreign banks has helped maintain momentum in attracting overseas funds.
A rise in FCNR(B) deposits could provide banks with greater flexibility in managing liquidity, reducing dependence on more expensive funding sources and supporting lending activity.
The measures are expected to strengthen banks’ ability to meet credit demand while improving overall financial system stability amid evolving global and domestic market conditions.
(Except for the headline, this article has not been edited by FPJ's editorial team and is auto-generated from an agency feed.)
