Bumper $127 billion FCNR(B) inflows expected to boost bank earnings by Rs 11,000 crore
Jefferies projects that the recent closure of the Foreign Currency Non-Resident scheme brought in $127 billion, adding Rs 11,000 crore in annual earnings despite potential margin pressure. The total inflows from all schemes now reach $136.4 billion.
The Foreign Currency Non-Resident (Bank) scheme recently closed with a surge of more than $127 billion in new funding. This influx adds to the total inflows from such special schemes, which currently stand at $136.4 billion according to provisional data released by the Reserve Bank of India. Jefferies analysts stated that these funds should increase banking sector earnings by Rs 10,000 crore to Rs 11,000 crore annually. While this capital boost benefits balance sheets and increases foreign exchange reserves held by the central bank, it may dilute net interest margins in the near term. The analysis highlights that small private banks and Non-Banking Financial Companies will likely see greater gains from these specific funds. Credit growth within the domestic sector is expected to moderate from 18 percent now to 15 percent by March 2027. Additionally, credit growth captured through bank leverage from foreign branches is projected to improve by 3 to 4 percentage points.
