Banks continue to garner FCNR deposits at a brisk pace

Mumbai: Banks continue to garner foreign currency deposits at a brisk pace, exceeding their own expectations. Two public sector banks, Chennai based Indian Bank and Mumbai based Central Bank of India together have garnered close to $1.5 billion so far, top executives of the bank said on the sidelines of the FICCI-IBA Banking Conference (FIBAC).

Indian Bank has garnered $1.2 billion in Foreign Currency Non-Resident (Bank) or FCNR(B) deposits so far and is on track to gather $2 billion of such deposits, CEO Binod Kumar told reporters on the sidelines of the conference.

Central Bank of India has surpassed the $100 million target set for July, garnering $250 million so far and is on track to raise a targeted $400 million, CEO Kalyan Kumar said.


Also Read: Travelling to Sri Lanka? Indian tourists can now save 20% on PickMe rides with UPI payments

"We have surpassed the July target set internally, and mobilised $250 million under FCNR (B)," Kalyan Kumar said on the sidelines of the annual FIBAC event here.

The Reserve Bank of India's special measures to attract foreign exchange have brought in $40.81 billion until July 31, driven largely by FCNR(B) deposits which accounted for $36.72 billion of the inflows, exceeding the $26 billion mobilised under a similar scheme in 2013. Banks can swap these deposits with the RBI under a zero-cost hedging facility available until September 30.

Also Read: Moving to Australia? Indians are sorting money before packing bags

By comparison, inflows under the swap facilities for external commercial borrowings (ECBs) and overseas foreign currency borrowings (OFCBs) have grown more modestly. ECB inflows rose to $1.51 billion from $1.34 billion, while OFCB inflows increased to $2.57 billion from $1.34 billion reported on July 17. Banks can raise funds through ECBs and OFCBs until the end of the year.

Last week SBI chairman CS Setty said that the bank had already mobilised nearly $6 billion in FCNR(B) deposits and expects to raise a total of $10 billion from this route.

SBI is offering 6% on five-year deposits above $1 million, while deposits below $1 million earn 5.75%. Three year deposits below $1 million get a 5.25% interest while above $1 million get 5.50% interest. Central Bank is offering 6.50% on three-year deposits and 6.60% on the five-year deposits, while Indian Bank offer 6% on three year deposits up to $1 million and 6.50% for five year deposits up to $1 million.