Foreign Currency Non-Resident Bank — or FCNR(B) — deposit mobilisation could reach as high as $70 billion, offering a significant liquidity cushion for Indian banks and reducing near-term stress on their balance sheets, according to assessments by global brokerages. The projections, shared on 21 July, come as early inflow data points to stronger-than-anticipated overseas depositor confidence in the Reserve Bank of India's (RBI) FCNR(B)-linked measures.

Early Inflows Stronger Than Expected

Brokerages including Jefferies, UBS, and Macquarie have flagged that the initial response to the RBI's FCNR(B) initiative has exceeded expectations. According to Jefferies, consultations with banks indicate that the bulk of inflows represent fresh capital rather than recycled or rolled-over deposits — a distinction that matters for genuine liquidity accretion. Funds are flowing primarily from major financial centres including the UAE, Singapore, and Hong Kong, routed through banks' own overseas networks and partner institutions.

Jefferies estimates that total FCNR(B) mobilisation in the $50 billion to $70 billion range would be a meaningful positive for the banking sector, provided current internal rates of return remain sufficiently attractive to sustain deposit momentum.

ECB and OFCB Windows Also Gaining Traction

UBS noted encouraging momentum across related funding channels as well. Banks have already raised approximately $1.97 billion under the External Commercial Borrowing (ECB) swap facility and an additional $1.34 billion through the Overseas Foreign Currency Borrowing (OFCB) swap window. According to UBS, these figures are running ahead of the guidance that several banks offered during their most recent earnings calls. Large private sector banks have signalled that mobilisation is likely to accelerate further in the weeks ahead, lending additional support to both funding conditions and credit growth.

Foreign Banks Step Up Participation

Macquarie characterised the latest FCNR(B) flow data as a positive surprise, noting that foreign banks have meaningfully stepped up their participation in the mobilisation drive, helping sustain the pace of inflows. The brokerage described the trend as a net positive for the broader Indian banking system.

Who Benefits Most

An easing liquidity environment is expected to deliver disproportionate benefits to non-banking financial companies (NBFCs) and smaller private sector banks, which have faced tighter funding conditions relative to large public sector lenders. Jefferies identified these segments as the preferred investment plays as the funding landscape improves. More broadly, lenders across the system are expected to gain greater flexibility to expand credit while reducing dependence on costlier wholesale funding sources.

What to Watch Next

The trajectory of FCNR(B) inflows over the next few weeks will be closely watched, particularly whether large private sector banks can sustain the acceleration they have projected. Any shift in internal rates of return — or a change in global risk appetite affecting NRI depositor behaviour — could alter the final mobilisation figure. For now, the data suggests that the RBI's measures have found meaningful traction with overseas Indian depositors.