$60 billion in 10 days: How banks pulled off a last-minute FCNR(B) deposit rush

Banks saw a sharp acceleration in Foreign Currency Non-Resident (Bank), or FCNR(B), deposit mobilisation in the final days before the special window closed on August 31, with more than $60 billion flowing into the system in just 10 days, according to Jefferies. The late surge helped take total FCNR(B) inflows to $136.4 billion, creating a major liquidity boost for the banking system.

Final-week rush drives FCNR(B) mobilisation

The sharp increase came after banks had already been competing aggressively for FCNR(B) deposits under the Reserve Bank of India's concessional swap facility. Jefferies said fund mobilisation “shot up in last week of the FCNR(B) window”, with the final 10 days alone accounting for more than $60 billion of system-wide flows.

The scale of the late mobilisation was reflected in the final numbers reported by individual banks.

State Bank of India mobilised close to $9 billion by the time the window closed, just below its earlier $10 billion guidance. ICICI Bank emerged as the standout among large private lenders, mobilising $17.88 billion, according to Macquarie. That gave it an estimated 18% share of FCNR(B) deposits, compared with its roughly 7% share of the overall deposit market.

HDFC Bank also ended with a substantially higher mobilisation than earlier data had indicated. Its FCNR(B) deposits were estimated at around $11.5-12 billion, according to sources cited in the report.

Smaller lenders punch above their weight

The deposit rush was not restricted to the country's largest banks. RBL Bank, despite having a much smaller overall deposit-market presence, mobilised around $3.4 billion by the close of the scheme. That translated into a 2.7% share of FCNR(B) deposits, significantly above its approximately 0.5% share of the normal deposit market, according to Motilal Oswal.

Foreign banks also increased their presence sharply during the mobilisation period. Jefferies estimated that foreign lenders' share of FCNR(B) deposits rose from just 1-2% in early June to 15-30% of incremental flows by the end of July. HSBC alone had mobilised around $6.1 billion by July 30, according to Motilal Oswal, with its incremental deposits reaching about $6.14 billion by August-end, based on Jefferies' bank-wise data.

FCNR(B) deposit rush: Key numbers

Bank / Indicator	FCNR(B) mobilisation	Key takeaway
Total system inflows	$136.4 billion	Total inflows under the FCNR(B) window
Final 10 days	$60+ billion	More than $60 billion came in during the last 10 days
ICICI Bank	$17.88 billion	Around 18% FCNR(B) market share vs 7% overall deposit share
HDFC Bank	$11.5–12 billion	Final mobilisation was higher than earlier data indicated
State Bank of India	~$9 billion	Close to its mobilisation guidance of $10 billion
RBL Bank	$3.4 billion	Captured 2.7% share vs ~0.5% normal deposit-market share
HSBC	~$6.14 billion	Among the major foreign-bank beneficiaries
Foreign banks	15–30% of incremental flows	Share rose from 1–2% in early June
NBFC stocks	+15%	Three-month performance
Small private banks	+11%	Three-month performance

Source: Jefferies, Macquarie, Motilal Oswal and BofA Securitie

Liquidity boost could benefit NBFCs

The influx is already showing up in relative market performance. Jefferies data shows NBFC stocks gained 15% over three months, while small private banks rose 11%. Large private banks gained 5%, compared with a 2% rise in the Nifty 50.

Jefferies expects the improved system liquidity to disproportionately benefit NBFCs and smaller private banks, even though FCNR(B) deposits carry lower margins than conventional deposits. The brokerage said the flows could enhance liquidity ahead of the festive season and help keep rates lower.

Motilal Oswal has raised its systemic credit-growth estimate to 14.3% for FY27, with upside risk to 15.5-16%, as banks absorb the liquidity windfall created by the FCNR(B) mobilisation.