Brokerages are turning increasingly constructive on the banking sector after the Reserve Bank of India's foreign currency mobilisation scheme attracted more than $40 billion of inflows in less than two months, with analysts expecting the final tally to climb as high as $80-100 billion.
The RBI's concessional swap facility for FCNR(B) deposits, overseas foreign currency borrowings and external commercial borrowings has garnered total inflows of $40.82 billion as of July 31. Introduced in June to attract stable dollar inflows and ease pressure on the rupee, the scheme has already crossed the halfway mark, according to analysts.
Jefferies estimates banks have mobilised over $40 billion so far, including gross FCNR(B) inflows of $37 billion, although net additions stand at around $28 billion after adjusting for rebooked deposits. With two months still remaining under the scheme, the brokerage believes total inflows could ultimately reach $80-100 billion.
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The brokerage expects the liquidity boost to benefit the broader banking system, particularly NBFCs and smaller private banks that are more sensitive to funding conditions. It also noted that several large private lenders have already raised FCNR(B) deposit rates by 10-25 basis points, with others likely to follow as competition for NRI deposits intensifies.
Citi said the latest bank-level data challenges the prevailing market view that public sector banks would be the biggest beneficiaries. Instead, private banks mobilised $10.7 billion, accounting for 38.3% of net inflows—almost exactly in line with their deposit market share—while foreign banks contributed another $8.4 billion, or 30%, led by HSBC and Standard Chartered.
Among private lenders, ICICI Bank, Kotak Mahindra Bank, YES Bank and RBL Bank outperformed relative to their deposit base, while HDFC Bank lagged peers. PSU banks, despite commanding the largest deposit base, captured just 31.6% of incremental FCNR(B) inflows.
Morgan Stanley echoed the trend, highlighting that foreign banks accounted for nearly 30% of incremental FCNR(B) deposits despite holding only about 5% of the overall deposit market. The brokerage also flagged ICICI, Kotak, Axis, HSBC and Standard Chartered as standout mobilisers.
ALSO READ: HSBC, SBI, ICICI Bank Emerge Top Beneficiaries Of RBI's NRI Dollar Deposit Scheme
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