Antique Favors Large Private Banks as FCNR Deposits Ease Rates

Antique is a brokerage that studies banks and their share prices.

It prefers large private banks over government-owned banks.

The brokerage said a special type of foreign-currency deposit could bring in about $70 billion.

It expects this money to help steady the rupee and lower government bond yields.

Some private banks may see their profit margins fall slightly if customers borrow money to make these deposits.

However, faster balance-sheet growth and opportunities to sell more products could offset that pressure.

Banks with weaker sources of deposits may benefit from lower market interest rates.

Antique also expects management clarity at HDFC Bank and Kotak Mahindra Bank to refocus investors on their business performance.

It said mid-sized private banks could benefit from better liquidity and stable asset quality.

Overall, the brokerage believes large private banks look relatively attractive because their premium over other banks has narrowed.