State-owned lender Bank of India (BoI) is actively pursuing a target of $1.2 billion in Foreign Currency Non-Resident (FCNR-B) deposits. This strategic initiative is designed to significantly reduce the bank's cost of funds by approximately 50-60 basis points during the current financial year, according to Rajneesh Karnatak, MD and CEO of Bank of India.
The bank has already successfully secured close to $200 million through these FCNR(B) deposits, witnessing strong traction across various international geographies. Karnatak highlighted that deposits are flowing in from key markets including Canada, the United States, the UK, Singapore, Hong Kong, and Japan.
RBI's Special Window and Broader Impact
The Reserve Bank of India (RBI) had introduced a special window for banks to raise FCNR(B) deposits, allowing them to swap these funds at concessional rates until September 30, 2026. This measure was intended to bolster India's foreign exchange reserves. Cumulatively, Indian banks have raised approximately $17.40 billion via FCNR(B) deposits under this window, as reported by the RBI earlier this week.
Bank of India is offering competitive interest rates ranging from 6.25 percent to 6.50 percent for FCNR(B) deposits. This compares favorably against current bulk deposit rates, which are around 7 percent, underscoring the expected cost savings for the bank.
Growth Projections and Financial Performance
Beyond the FCNR(B) drive, Bank of India anticipates robust growth in its overall credit portfolio. Global advances are projected to expand by 15-16 percent in the financial year ending March 2027, with total deposits expected to grow by 13-14 percent. The bank has also launched a targeted campaign for deposit mobilization in the Rs 3 crore to Rs 25 crore range to optimize its funding base for credit expansion.
For the April-June quarter of 2026, Bank of India reported a net profit of Rs 3,068 crore, marking a substantial increase of over 36 percent year-on-year. Net interest income (NII) for the period rose by 12.6 percent to Rs 6,833 crore. During the same quarter, global deposits grew by 14.90 percent and advances by 18.64 percent.
Asset Quality Improvement
The bank has also demonstrated significant improvement in asset quality. Gross non-performing assets (NPAs) decreased to 1.81 percent in June 2026, down from 2.92 percent in June 2025. Similarly, net NPAs improved to 0.51 percent from 0.75 percent over the same period.
Addressing potential risks, Karnatak noted that the bank is closely monitoring the impact of El Niño on the upcoming monsoon season. While there has been no immediate effect on asset quality, any potential impact could manifest in the second quarter.