Private Bank Leaders Cautious on NRI Deposit Growth; Key Lenders Highlight Influencing Factors on Inflows

MUMBAI: Leaders of major private banks are expressing caution regarding the Reserve Bank of India’s (RBI) Foreign Currency Non-Resident (Bank) [FCNR(B)] deposit window. They cite tax regulations, global liquidity conditions, and regulatory constraints as factors that may limit inflows to levels below initial projections.

HDFC Bank’s Managing Director and CEO, Sashidhar Jagdishan, indicated that the anticipated inflows could fall short of the initial estimate of $60-80 billion. He noted that tax implications make the ‘borrowing to invest’ option less appealing for many non-resident Indians (NRIs) outside of West Asia and Singapore. “The impact of taxation for NRIs was not fully assessed when the scheme was launched,” Jagdishan explained, adding that many overseas citizens in Europe, the US, and Australia are unlikely to utilize the deposit window.

Jagdishan also pointed to liquidity constraints in West Asia, where geopolitical tensions have led central banks in countries like the UAE and Oman to limit leverage and require banks to hold higher liquidity buffers. He revised the potential inflow estimate to around $50-55 billion, relying on insights from market experts. HDFC Bank has raised significant amounts recently, though Jagdishan did not disclose specific figures. He mentioned that the bank is also facing challenges due to an embargo from the UAE regulator on onboarding new customers.

Kotak Bank’s MD and CEO, Ashok Vaswani, refrained from providing specific targets, stating that the amount of leverage available will depend on partnerships with other banks. “It’s still early days,” he remarked. ICICI Bank’s executive director, Sandeep Batra, stated that leverage would be determined by customer profiles and the willingness of partners to provide it. He emphasized the bank’s focus on tapping into the Indian diaspora through its international branches, particularly in West Asia.

Axis Bank’s MD and CEO, Amitabh Chaudhry, described the scheme as an opportunity to reduce costly liabilities. He noted that several factors would influence the amount banks can raise, including leverage and lending rates. “Every parameter has to be looked at,” Chaudhry said, emphasizing the complexity of the situation.

Observer Voice is the one stop site for National, International news, Sports, Editor’s Choice, Art/culture contents, Quotes and much more. We also cover historical contents. Historical contents includes World History, Indian History, and what happened today. The website also covers Entertainment across the India and World.

Follow Us on Twitter, Instagram, Facebook, & LinkedIn