Moody's expects Indian banks' deposit growth to accelerate to around 15% in FY27, helped by a surge in foreign-currency non-resident (FCNR(B)) deposits.
Excluding the FCNR(B)-linked increase, deposit growth is seen at around 10% in FY27, while bank loan growth is projected at 13-15%, Moody's said, according to Informist.
The rating agency said the Reserve Bank of India's swap schemes have helped rebuild the country's external buffers and eased pressure on the rupee.
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The expected rise in FCNR(B) deposits is also likely to improve banks' funding profiles, although the benefits will vary across lenders, Informist reported.
A large inflow of FCNR(B) deposits could allow banks to replace higher-cost funding and reduce competition for domestic deposits, making the development credit positive for the sector, Moody's said.
The agency expects banks' liquidity coverage ratio (LCR) to rise above 130% in the near term. The additional funding could also support lending and help ease pressure on net interest margins (NIMs).
However, Moody's expects FCNR(B) deposits to initially dilute banks' NIMs before the benefit of deploying the funds into loans starts to emerge.
A large inflow of such deposits could also bring refinancing and maturity-concentration risks, although it would improve overall funding stability, the agency said.
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Moody's expects Indian banks' loan-to-deposit ratio to rise to 82-83% in FY27, from 81.4% in FY26, reflecting stronger credit growth relative to deposits excluding the temporary boost from FCNR(B) inflows, Informist reported.
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