South Indian Bank targets 13-14% credit growth in FY27, sees FCNR deposits getting a boost

The overall economic outlook may have turned somewhat cloudy amid the conflict in West Asia, but private sector lender South Indian Bank remains confident of clocking 13-14 per cent growth in advances or slightly better, depending on how the conflict pans out.

The Kochi, Kerala-based lender is also expecting strong growth in deposits, more so aided by the Reserve Bank of India opening a special window for foreign currency non-resident bank deposits (FCNR (B)).
 
“With the new policy of the regulator taking the arbitrage cost, we are definitely looking at some good buildup there in FCNR deposits. So I think across the industry, that is going to be an opportunity. I am sure we will get our share there,” Dolphy Jose, the executive director of The South Indian Bank (SIB), told Business Today.

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Given its roots in Kerala, the company has a lot of customers from the state working in West Asia. According to Jose, around 32 per cent of its overall liability base is non-resident, and out of that, 10 per cent is in FCNR.
 
The Reserve Bank had announced a special window for banks to raise FCNR deposits in a bid to bring in more foreign exchange and shore up the depreciating rupee. Several banks have since raised their interest rates offered on the FCNR (B) deposits, and NRIs can now earn up to 7 per cent on such deposits.
 
SIB is offering an interest rate of 6.50 per cent on FCNR (B) US dollar deposits.
 
It expects to maintain its overall liabilities growth at around 17 per cent or higher in the current financial year ending March 2027, with FCNR deposits likely to grow around 20 per cent, according to Jose.
 
He pointed out that so far, the lender hadn’t seen any impact of the West Asia crisis on remittances. In fact, he noted that initially, the lender saw a rise in remittances, as people in West Asia sent more money back home.
 
Jose said that there were concerns in the industry that should the conflict drag on longer, the input costs would go up, and the disruption in logistics would also stretch operating cycles and impact the balance sheets of micro, small and medium enterprises (MSMEs). Fortunately, signs are that things are easing, and the hope is that in a couple of months, normalcy should return.
 
SIB has predominantly had a large presence in Kerala. However, the lender is now looking to expand, first in the south and also in the west.
 
“Our focus is going to be on our sister state of Tamil Nadu, where we have a decent presence. We will double up there and then get to the rest of the south, which is Karnataka, Andhra Pradesh and Telangana. With the rest of the South, we will be equally focussed with west,” said Jose.
 
SIB has a network of 948 branches. In the January-March quarter of 2026, its loan book stood at a little over Rs 1 lakh crore. Kerala alone accounted for 30 per cent of that. The other southern markets accounted for 33 per cent, and the rest of India 37 per cent.
 
The lender is also increasing its focus on the retail and MSME segments. It has also recently entered the mid-market segment, noted Jose. One area among retail loans that has seen strong traction across the industry has been in gold loans as gold prices surged in 2025. SIB expects around 25 per cent growth in this segment in the current financial year, although a few other lenders are growing at a much faster 35-40 per cent clip in gold loans.
 
“We do not want to resonate ourselves as a gold loan bank. We would like to be a bank which does all the other products resonating more as an MSME and retail bank,” Jose said.
 
The lender is also looking to scale up in the wealth management business and is looking to launch its own credit card. So far, it has only had a co-branded card with a fintech partner. SIB hopes to launch its own credit card by the end of this financial year or the first quarter of FY2028.