Bank stocks rise as strong FCNR (B) inflows boost liquidity outlook
Bank stocks gained on Thursday after data released by the Reserve Bank of India (RBI) on Wednesday showed that they had mobilised $127.2 billion through foreign currency non-resident (bank), or FCNR(B), deposits.
Among private sector lenders, RBL Bank mobilised $3.4 billion through the facility during the period, with its international banking unit subsequently deploying $1.08 billion as loans backed by these deposits.
IDFC First Bank mobilised a gross amount of $3.57 billion from NRI customers under the RBI’s FCNR(B) swap window. ICICI Bank was one of the largest mobilisers under the special FCNR(B) window, raising around $17.88 billion as of August 31, 2026.
Shares of RBL Bank closed 4.80 per cent higher at Rs 408.10, while IDFC First Bank’s shares were up 2.83 per cent at Rs 87.50. Among major banks, HDFC Bank was up 0.83 per cent to close at Rs 706.65, ICICI Bank rose 0.25 per cent to Rs 1,430 and Axis Bank rose 1.04 per cent to Rs 1,267. Nifty Bank was up 0.36 per cent at 57,380.6 points, while the broader indices closed in the red.
The strong response from overseas depositors to the facility prompted the central bank to advance its original closing date by a month.
In its report, Motilal Oswal Financial Services said that the record-high FCNR(B) inflows have backed its estimates of a 150-bps increase in system credit growth to 15.5-16 per cent for FY27.
“FIIs had been on a constant selling spree (USD47b from CY24 to Jun’26), led by uncertain global macros and better investment opportunities in other Asian emerging countries. Large private banks have thus been impacted the most, with FII holdings in these banks declining by 3-13 per cent in recent years,” analysts at Motilal Oswal said.
“However, the RBI’s measures on incentivizing higher overseas borrowings and FCNR(B) deposits, coupled with taxation benefits on capital gains in debt markets and opening up more debt instruments for FII investments, led to net inflows of $4.8b in the last two months, while USD/INR depreciation has halted,” they added.
A report by Jefferies India said the flows enhance liquidity ahead of the festive season and may help keep rates lower.
“Better liquidity will benefit NBFCs & Small Pvt banks. While FCNR-B makes lower NIM, but is accretive to NII,” the report said.
