New Delhi, Sep 5 — Strong foreign‑currency mobilisation has injected ample liquidity into India’s banking system ahead of the festive season and is expected to support credit growth, a report said on Saturday.
The report from Axis Securities said the Reserve Bank of India’s special FCNR(B) swap facility helped banks mobilise $127.2 billion in FCNR(B) deposits.
Nearly $5.3 billion was mobilised through other foreign‑currency borrowing routes and $3.9 billion through external commercial borrowings, as the total foreign‑currency mobilisation stood at $136.4 billion. The FCNR(B) quantum more than doubled from $52.3 billion on August 13, 2026, and far exceeded market expectations.
"This mobilisation was sharper in the last fortnight, from $65.4 billion on August 21, 2026. At present, this strong deposit accretion would be adding nearly 4.5 per cent to overall systemic deposits as of mid-August 2026," the report noted.
The efforts would collectively support systemic liquidity, ease the near-term pressure on deposit accretion, lower LDRs for banks, and also positively support forex reserves, the firm said.
The report said the inflows have produced a banking‑system liquidity surplus that totalled Rs 6.7 trillion at the end of August 2026 and increased to Rs 7.8 trillion by September 1, 2026.
The systemic deposit growth improved to 14.7 per cent as of mid‑August 2026 from a largely range‑bound 12–13 per cent in April–June 2026.
The strong FCNR (B) flows should support overall deposits growth in the near term, which has been continuously lagging credit growth, the firm said.
The report forecasted "some near-term compression in NIMs as spreads on the overseas leverage are typically finer, and also deployment into margin-accretive segments could take time."
Effective deployment of these deposits should help decide the margin trajectory and over the medium term, the firm expects the margin trajectory to remain an outcome of the portfolio mix of respective banks.