- FCNR(B) deposits attracted $136.4 billion due to RBI’s flexible swap costs and CRR exemptions
- ICICI Bank led with $17.88 billion mobilised, gaining 18% market share versus 7% usual share
- HDFC Bank lagged peers, mobilising only $1.4 billion despite similar deposit base to ICICI
India's Foreign Currency Non-Resident (Bank), or FCNR(B), deposit scheme has thrown up a clear set of winners, with several large lenders posting strong final numbers once the window closed on August 31. Brokerage reports from Macquarie, Jefferies, Motilal Oswal (MOSL) and BofA Securities, show that banks which leveraged their overseas balance sheets and offered the sharpest rate hikes captured a share of the $136.4 billion (~Rs 12.96 lakh crore) inflow far beyond their usual footprint in the deposit market.
ICICI Bank was the standout among large private lenders. The bank mobilised $17.88 billion (~Rs 1.70 lakh crore) of FCNR(B) deposits by August 31, according to Macquarie, implying an 18% market share against a current deposit market share of just 7%. MOSL puts ICICI's share slightly lower at 14%, still well ahead of its usual size. More than 70% of the bank's mobilisation leverage came from its own balance sheet, comprising close to $9 billion (~Rs 0.86 lakh crore) in loans from its international branches and $3.6 billion (~Rs 0.34 lakh crore) in standby letters of credit issued to other banks, Macquarie noted.
State Bank of India mobilised close to $9 billion (~Rs 0.86 lakh crore) just before the window closed, ahead of its own $10 billion (~Rs 0.95 lakh crore) guidance. RBL Bank, a much smaller private lender, showed an even sharper pattern of outperformance relative to its size, adding $3.4 billion (~Rs 0.32 lakh crore) by the scheme's close to capture a 2.7% share, well above its normal deposit market share of about 0.5%, according to MOSL.
HDFC Bank's final numbers came in well above what earlier data had suggested. The pulled nearly $12 billion through FCNR(B) deposits under the RBI's concessional swap facility, with total mobilisation at around $11.5-12 billion (~Rs 1.09-1.14 lakh crore), sources told NDTV Profit. The scale of the increase mirrors a broader pattern Jefferies flagged across the scheme, where fund mobilisation "shot up in last week of the FCNR(B) window," with the last ten days alone adding over $60 billion system-wide.
FCNR(B) winners and where analysts are placing their bets.
Photo Credit: NDTV Profit
Foreign banks were the relative gainers. According to Jefferies, foreign lenders' share of FCNR-B deposits jumped from 1-2% as of early June to between 15% and 30% of incremental flows by end-July. HSBC alone captured roughly 22% of total inflows, mobilising $6.1 billion (~Rs 0.58 lakh crore) as of July 30 according to MOSL, with its overall share climbing further to $6.14 billion (~Rs 0.58 lakh crore) in incremental deposits by August-end per Jefferies' bank-wise data. Standard Chartered added a further 7% share.
ALSO READ: FCNR Deposits Beat Estimates, RBI To Pull Out Rs 6-7 Lakh Crore: Pranjul Bhandari
The liquidity windfall has already shown up in relative stock performance. NBFC (non-banking financial company) shares have gained 15% over the past three months and small private banks 11%, against 5% for large private banks and 2% for the Nifty 50, Jefferies data shows. The brokerage argues the improved system liquidity should disproportionately benefit NBFCs and smaller private banks going forward, even though FCNR(B) deposits carry lower margins than typical deposits. "Flows enhance liquidity ahead of festive season & may help keep rates lower," Jefferies analysts Prakhar Sharma and Vinayak Agarwal wrote.
MOSL has raised its systemic credit growth estimate to 14.3% for FY27 (financial year 2026-27), flagging upside risk to as much as 15.5-16.0%, and named ICICI Bank, State Bank of India, Kotak Mahindra Bank and AU Small Finance Bank (AU SFB) as its top picks tied to the trend. Jefferies rates ICICI Bank, HDFC Bank, State Bank of India, Kotak Mahindra Bank and AU Small Finance Bank all Buy, with upside estimates ranging from 11% to 34% over a 12-month period.
Note: Rupee conversions are approximate, calculated at a flat rate of Rs 95 per US dollar for reference only.
FCNR(B) explained.
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