3 weeks ago
SBI expects $10 billion FCNR(B) inflows to support lending
SBI is a very big bank in India where people and companies keep their money.
Recently, the Reserve Bank of India, the country's central bank, opened a special window that lets banks accept foreign money from people living outside India.
SBI has already collected about $6 billion through this window.
The bank hopes to collect around $10 billion, which is close to one trillion rupees.
That is a huge amount of money.
SBI wants this money to help it give more loans to people and companies.
With this extra money, SBI will not have to pay high interest to borrow from big depositors.
The bank's chairman, C.S. Setty, says the funds will help SBI grow while keeping costs down.
SBI also announced its quarterly results, with a 10.2% rise in profit.
The bank expects its loans to grow by 14-15% this year.
SBI has mobilized about $6 billion in FCNR(B) deposits under the RBI's special window and expects to raise about $10 billion (close to ₹1 trillion).
Chairman C.S. Setty said the inflows will help finance loan growth while reducing reliance on expensive bulk deposits.
SBI reported a 10.2% year-on-year rise in net profit to ₹21,121 crore for the April-June quarter.
The bank guided 14-15% credit growth and 10-11% deposit growth for the year, after gross advances rose 18.6% year-on-year in Q1.
Setty said it was too early to assess the impact of FCNR(B) inflows on margins, and SBI maintained its 3% NIM guidance for the full year.
- Who
- State Bank of India (SBI) chairman C.S. Setty, speaking after the bank announced its first-quarter results
- What
- SBI expects to raise about $10 billion (close to ₹1 trillion) in FCNR(B) deposits to fund credit growth and lower funding costs
- Where
- India; Setty spoke in Mumbai
- When
- Friday, after SBI announced its April-June quarter results
- Why
- To finance incremental loan growth and reduce reliance on expensive bulk deposits
Some Private Lenders
SBI Management
Impact of FCNR(B) inflows on net interest margins
Some Private Lenders
Large FCNR(B) inflows could dilute net interest margins, as some private-sector lenders have indicated.
SBI Management
It is too early to assess the impact because lower funding costs could offset any pressure on margins; SBI is sticking to its 3% NIM guidance.
Key facts
- Bank
- State Bank of India (SBI)
- FCNR(B) deposits mobilized so far
- About $6 billion
- Expected FCNR(B) deposits
- About $10 billion (close to ₹1 trillion)
- June quarter net profit
- ₹21,121 crore, up 10.2% year-on-year
- June quarter net interest income
- ₹46,992 crore, up 14.9%
- June quarter net interest margin
- 2.86%
- Full-year credit growth guidance
- 14-15%
- Full-year deposit growth guidance
- 10-11%
Quotes
C.S. Setty
Chairman of State Bank of India
“"Everyone will try to see that the bulk deposits are priced reasonably, if not completely moving out of bulk deposits. Essentially, as long as these flows are adequate to cover credit growth, SBI will not be aggressively pricing the bulk deposits."”
livemint.com
“"With our excess liquidity, what we have in our balance sheet at this moment, 10-11% deposit growth rate will comfortably provide the adequate funding for our credit growth."”
livemint.com
Sources
Related news
SBI Targets $10 Billion in FCNR Deposits by September
SBI expects $10 billion FCNR(B) deposits, targets 14-15% credit growth
India Draws Record $127 Billion Through Special FCNR Window
India’s Foreign Currency Facility Draws $72.85 Billion
RBI shortens FCNR(B) swap scheme as inflows hit $56.8 billion
Bank deposits hit record high on RBI's FCNR push
NSE derivatives turnover falls below ₹200 lakh crore in August
Vodafone Idea Shares Rise as Brand Revamp Draws Investor Attention
Augmont Enterprises Rises Despite Gold-Buying Appeal and Market Risks
BSE Shares Fall as New Closing Auction Session Draws Scrutiny
BSE Seeks Common Order Book to Boost Closing Auctions
