Top private lenders carefully assess market dynamics before fully mobilising new foreign currency funds.
Major Indian banks are taking a measured approach to foreign currency deposits despite central bank incentives.
The Reserve Bank of India recently introduced measures to boost foreign inflows. Major Indian private lenders are adopting a cautious stance regarding these initiatives. These institutions are carefully evaluating market conditions before fully mobilising non-resident foreign-currency deposits. Top banks withheld specific inflow figures during their recent first-quarter results presentations.
Early estimates suggested up to $50 billion could be raised through this special window. Narrower rate differentials and taxation issues have subdued initial market expectations. Large private banks currently offer interest rates between 6 and 6.5 per cent. Meanwhile, smaller finance banks provide slightly more attractive returns exceeding 7 per cent.
ICICI Bank management confirmed that they will tailor deposit leverage to distinct customer profiles. Furthermore, the institution plans to adjust its interest rates gradually. HDFC Bank recently secured $750 million in overseas funding. However, the leadership refrained from specifying the exact portion derived from these special deposits.
To attract clients, HDFC Bank and Yes Bank currently offer up to 9x leverage. Axis Bank chose to delay detailed commentary until the second quarter concludes in September. The leadership intends to assess broader market traction before disclosing their mobilisation figures. Additionally, Kotak Mahindra Bank is actively seeking partnerships across Asia and the Middle East.
This strategy aims to strengthen their overall proposition for foreign currency deposits. Ultimately, the central bank’s regulatory exemptions have not yet triggered the anticipated massive inflows. Therefore, the banking sector remains observant, prioritising measured growth over immediate accumulation.
(Source: Moneycontrol)
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