London-headquartered HSBC has become the largest beneficiary of the Reserve Bank of India's (RBI) concessional Foreign Currency Non-Resident (Bank), or FCNR(B), deposit swap scheme. The bank successfully mobilized over $6 billion in deposits since the facility was introduced in June to attract vital foreign currency inflows into India.
HSBC, SBI, and ICICI Lead the Charge
Government data reveals HSBC's outstanding FCNR(B) deposits surged from $120.26 million on June 5 to $6.26 billion by July 30, marking an impressive increase of more than $6.14 billion. This performance positions HSBC as the leading mobilizer under the RBI's special window, which enables banks to raise foreign currency from non-resident Indians (NRIs) and swap these funds with the RBI at a concessional rate.
Following closely, State Bank of India (SBI) secured the second spot, with its FCNR(B) deposits growing by approximately $4.12 billion, pushing its total from $9.70 billion to $13.82 billion. ICICI Bank also demonstrated strong performance, adding nearly $3.70 billion, bringing its outstanding deposits to $6.06 billion from $2.37 billion.
Broader Participation and Overall Inflows
The scheme has seen broad participation across the Indian banking sector. Other notable contributors include Kotak Mahindra Bank, which mobilized around $1.66 billion, Axis Bank with nearly $1.59 billion, and HDFC Bank, raising about $1.41 billion. Public sector lender Canara Bank recorded inflows of roughly $930 million, while Yes Bank posted an increase of over $810 million during the same period.
Overall, outstanding FCNR(B) deposits in the government data swelled from $32.56 billion on June 5 to $60.55 billion by July 30, reflecting substantial inflows of nearly $28 billion into the Indian economy. Private sector banks collectively attracted the highest inflows, with their outstanding FCNR(B) deposits rising by about $10.73 billion.
Strategic Move to Boost Liquidity
The FCNR(B) swap facility, operational since June 8, was introduced by the RBI to enhance foreign currency inflows, improve liquidity within the banking system, and provide support for the Indian rupee amidst global market volatility. Experts like Deepak Shenoy, founder and CEO of Capitalmind Mutual Fund, highlighted HSBC's exceptional performance, noting that the scheme allows banks to secure funding at an effective rupee cost of about 6% for three years while mitigating dollar exchange rate risks.
With the special window remaining open for an additional two months, banks are expected to continue their aggressive efforts to attract NRI deposits, potentially driving inflows even higher before the scheme concludes.