Neutral impactEconomy
FCNR(B) liquidity may be deployed over 3-4 months: Setty
BusinessLine 54 min ago·10 Sept 2026, 4:17 pm
The Reserve Bank of India (RBI) has recently allowed banks to use their excess Foreign Currency Non-Resident (Banks) (FCNR(B)) deposits for domestic lending. This move unlocks a significant pool of foreign currency funds that were previously locked in special accounts. The funds can now be deployed to support credit growth in the Indian economy.
This development is a positive signal for the banking sector, as it provides a stable source of low-cost liquidity. For investors, this means banks are likely to see improved profitability and stronger balance sheets. It also suggests that the banking system has ample resources to manage liquidity needs without immediate pressure on interest rates.
Investors should monitor the pace at which banks utilize these funds. While the liquidity is available, the actual deployment will take time. Watch for quarterly earnings reports to see if banks are effectively converting this liquidity into loans and how it impacts their net interest margins.
Excerpt from BusinessLine
Banks are unlikely to immediately deploy the liquidity generated through FCNR(B) deposits, with the process expected to take another three to four months, according to Challa Sreenivasulu Setty, Chairman of State Bank of India (SBI). “I think everybody will be more responsible. It will take about three to four months…Read the original at BusinessLine
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