The scheme became effective on June 8 and will remain in force until September 30, 2026.
According to data shared by the government in Parliament, foreign banks mobilised $8.37 billion, taking their outstanding FCNR(B) deposits to $8.97 billion from $603 million. Private sector banks garnered $10.73 billion, while public sector banks mobilised $8.84 billion. Small finance banks and cooperative banks together accounted for around $50 million of incremental deposits.
Among individual lenders, HSBC emerged as the largest mobiliser, with FCNR(B) deposits rising by $6.14 billion during the period. SBI followed with $4.12 billion, while ICICI Bank mobilised $3.70 billion. Other major contributors included Standard Chartered Bank ($1.86 billion), Kotak Mahindra Bank ($1.66 billion), Axis Bank ($1.59 billion), and HDFC Bank ($1.41 billion).
Among public sector banks, Bank of Baroda mobilised $1.05 billion. Punjab National Bank and Canara Bank mobilised $970 million and $933 million, respectively.
Outstanding FCNR(B) deposits with authorised dealer banks rose to $60.55 billion as of July 30 from $32.56 billion on June 5, translating into fresh net inflows of $27.99 billion during the period. The data take into account FCNR(B) deposits that matured during the period.
RBI data, released on Saturday, showed banks had mobilised nearly $41 billion in foreign exchange inflows under the concessional swap window as of July 31, including $36.7 billion through fresh FCNR(B) deposits.
According to a senior banker, private sector banks have lagged state-owned and foreign banks in FCNR(B) mobilisation largely because of pricing discipline. As leverage has become more expensive, banks could have mobilised significantly larger volumes but only by sacrificing margins. The key difference, the banker said, lies in pricing appetite, with several public sector banks willing to operate with much thinner spreads to attract deposits, while private lenders have been more selective in balancing deposit mobilisation with profitability. In addition, private banks with relatively smaller overseas franchises have faced constraints in arranging funding lines and leverage for customers.
“For Indian private sector banks that do not have a large overseas presence, mobilising FCNR(B) deposits requires considerable groundwork in each market. We need to build relationships with correspondent banks, arrange internal funding lines, work with partner banks and establish the necessary channels before deposit flows begin. Unlike foreign banks, which already have an established international franchise, private Indian banks have to invest time and effort in creating that network,” said a senior banker at a large private sector bank.
Among private banks, AU Small Finance Bank also raised the peak rate on its FCNR(B) deposits to 7.4 per cent from 7.1 per cent for deposits with a tenor of three to four years.
“…Competition has also picked up. HDFC Bank has hiked its FCNR(B) rates and, following that, even ICICI has increased its rates. In our view, Q1 wasn’t the bottom for bank margins. Q2 will be under greater pressure because FCNR(B) money isn’t very cheap money,” said Suresh Ganapathy, managing director and head of financial services research at Macquarie Capital.
More lenders are expected to revise their rates upwards as competition intensifies ahead of the RBI’s September-end deadline for the swap facility.
“Funding costs have risen as leverage has become more expensive, and banks also need to remain competitive in attracting FCNR(B) deposits under the RBI’s swap window. The higher deposit rates are therefore a response to both increased funding costs and competitive pressures, while ensuring that lending margins remain commercially viable. Ultimately, each bank is making its own trade-off between maximising mobilisation and preserving profitability,” said another banker.
The first banker quoted earlier said lenders are closely watching whether recent rate hikes by peers translate into higher deposit inflows before deciding whether to revise their own pricing.
“Some banks have recently increased their FCNR(B) deposit rates, and we will assess whether that translates into a meaningful increase in deposit inflows. If we find higher published rates are materially influencing mobilisation, we will review our pricing accordingly,” the banker said.
