Foreign-currency inflows flatter deposit growth at Indian banks, Moody's says
Moody's analysis of 10 Indian banks: deposit growth of 21.1% in July–September falls to 12.2% without FCNR(B) inflows from the RBI window.
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what happened
According to Moody's, an analysis of 10 Indian banks found that deposit growth averaged 21.1% year on year in July–September. Excluding inflows linked to the Reserve Bank of India's special window for FCNR(B) accounts, growth slows to 12.2%. Lending shows a similar pattern, at 24.2% reported versus an estimated 18.9% without the window.
The window closed on August 31, and during its run banks collected roughly $133 billion in FCNR(B) deposits. Lenders now plan to put the surplus liquidity into loans over the next two quarters while cutting reliance on expensive wholesale funding.
why it matters
For markets, the strong deposit figures are largely temporary, and the durability of the retail deposit base remains uncertain. Rates on fresh domestic term deposits fell by 40 basis points in April–August, partly due to these inflows, which has eased competition for local deposits for now.
market impact
Indian banks: foreign-currency inflows temporarily inflate deposit growth, while underlying funding remains weaker.
instruments
sources
- FNCR Flows Mask Banks' Deposit Woes — Moody's, 31 October 2026 at 04:13 UTC
prepared by the newsmetry newsroom with ai assistance from the sources listed below. not investment advice.
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