Bank of Baroda is targeting to raise $3 billion through Foreign Currency Non-Resident (Bank) [FCNR(B)] deposits after the Reserve Bank of India introduced measures to draw foreign currency inflows and support the rupee, a senior official told FE.
“Considering the bank’s market share of around 5% and its strong overseas presence across key NRI corridors, the bank is targeting mobilisation of FCNR(B) deposits in the range of $3 billion during the scheme period,” the official said.
The expected inflows to the banking industry under the FCNR(B) deposit scheme are estimated to be in the range of $40–45 billion, the official added.
Hedging Incentives
On June 5, the RBI announced covering full hedging cost for FCNR deposits, along with a slew of other measures to attract foreign inflows and support the rupee. With enabling leverage, banks now expect higher inflows compared to earlier estimations.
The official further said that, given the current market environment, including the narrower interest rate differential and availability of alternative investment opportunities, the scheme is expected to generate a leverage effect of approximately 5–7 times.
Industry Targets
According to reports, Punjab National Bank is targeting $2.5–3 billion in FCNR(B) deposits, while Canara Bank expects to mobilise $105–210 million through the route.