Archive · 6 Sep 2026
FCNR(B) Inflows Could Give Smaller Lenders a Stock-Market Boost
Banks brought in a lot of foreign-currency deposits before the FCNR(B) window closed.
More than $60 billion entered the banking system in the last 10 days.
This gave banks more money to lend and improved overall liquidity.
Easier liquidity may help keep borrowing costs lower.
NBFCs and small private banks could benefit even though large banks collected most of the deposits.
Their shares have already risen more than those of large private banks and the Nifty 50 over three months.
Analysts also expect loan growth to become stronger.
However, these are potential benefits and not guaranteed investment results.
NBFC stocks rose 15% and small private banks 11% over three months, outperforming large private banks and the Nifty 50.
More than $60 billion entered the banking system during the final 10 days before the FCNR(B) window closed on August 31.
Jefferies said the inflows could improve liquidity, support funding conditions and keep interest rates lower.
ICICI Bank, HDFC Bank and State Bank of India were among the largest FCNR(B) deposit mobilisers.
Motilal Oswal lifted its FY27 systemic credit-growth estimate to 14.3%, with a possible upside to 15.5%-16%.
- Who
- NBFCs, small private banks and larger banks that mobilised FCNR(B) deposits; analysts at Jefferies and Motilal Oswal assessed the impact.
- What
- More than $60 billion entered the banking system before the FCNR(B) deposit window closed, potentially improving liquidity, funding conditions and credit growth.
- When
- The largest inflows occurred during the final 10 days before the August 31 closure; Motilal Oswal’s credit-growth estimate applies to FY27.
- Where
- Across the banking system.
- Why
- The inflows may create a liquidity surplus, put downward pressure on funding costs and support lending.
- FCNR(B) inflows
- More than $60 billion entered the banking system in the final 10 days of the window.
- Window closure
- The FCNR(B) window closed on August 31.
- NBFC stock performance
- NBFC stocks gained 15% over three months, according to Jefferies data.
- Small private bank performance
- Small private bank stocks gained 11% over three months.
- Large-bank mobilisation
- ICICI Bank mobilised $17.88 billion, HDFC Bank an estimated $11.5-$12 billion, and State Bank of India close to $9 billion.
- FY27 credit-growth estimate
- Motilal Oswal estimated systemic credit growth at 14.3%, with an upside possibility of 15.5%-16%.
- Jefferies stock view
- Jefferies rated ICICI Bank, HDFC Bank, State Bank of India, Kotak Mahindra Bank and AU Small Finance Bank as Buy, with estimated 12-month upside of 11%-34%.