Private sector lender RBL Bank has garnered $3.4 billion (Rs 32,472 crore) from FCNR(B) up to 31 August, the closure date of the Reserve Bank of India’s concessional swap facility. 

This accounts for a 2.7% share of the total foreign currency non-resident (Bank), or FCNR(B), deposits mobilisation, compared with the lender’s overall deposit share of over 0.5%. Banks collected a massive $127.2 billion under the RBI’s FCNR(B) swap facility. 

The lender said loans provided by its international banking unit against such deposits stand at $1.08 billion.

RBL Bank leveraged its promoter, Emirates NBD and their subsidiaries/affiliates, to tap a large pool of foreign currency non-resident (Bank), or FCNR(B), deposits from the UAE corridor.

Global brokerage firm Citi said the mobilisation is an outsized haul for a mid-sized bank. The deposits account for around 26% of RBL Bank’s total deposits and 37% of its term deposits.

The deposit accretion, according to Citi, could have a positive impact on earnings. The incremental deposits could increase the bank’s absolute net interest income (NII) by 7%  and pre-provision operating profit (PPOP) could rise by 10% in FY27. 

However, the larger balance-sheet denominator and structurally low net-interest margins (NIMs) on FCNR(B) deposits are likely to put pressure on reported NIMs in the near term, Citi said.

The pressure is mainly because the bank has to pay interest on the new deposits, while the funds may take time to be fully deployed.

Citi expects some of this pressure to be offset by the NIM benefit from RBL Bank's Rs 26,000 crore equity infusion.

Ultimately, the trajectory of RBL Bank’s NIMs will depend on how quickly the bank deploys and utilises the additional deposits, the brokerage firm said.