FCNR Inflows Rise: Will Improving Liquidity Give Banks And Markets A Fresh Growth Boost?

India’s liquidity conditions have improved, supported by rising FCNR inflows and healthy deposit growth, although the full impact is yet to reach the banking system. Aditya Pagaria, Senior Fixed Income Fund Manager, Axis Mutual Fund, says liquidity is likely to strengthen further as FCNR deposits increase over the coming months. He expects banks to mobilize $75–80 billion in FCNR deposits by September, while noting that the RBI’s liquidity management will determine how much cash reaches the broader market.