SBI Aims for $10B FCNR-B Deposits by September

The State Bank of India (SBI) anticipates raising up to $10 billion through Foreign Currency Non-Resident (Bank) [FCNR-B] deposits by September. The public sector lender has already secured approximately $6 billion towards this goal.

Mobilizing Foreign Currency Deposits

SBI Chairperson CS Setty confirmed the bank expects to raise an additional $4 billion. He noted that there is currently no need to either extend the scheme or cap its mobilization efforts.

• These deposits are primarily being raised through SBI’s GIFT City operations.
• The Reserve Bank of India (RBI) supports this by bearing hedging costs for eligible deposits.
• This support applies to deposits with three to five-year tenures.

Stable Rates and Liquidity Boost

Setty indicated that both loan and deposit rates are likely to remain stable in the near term. He does not anticipate any repo rate hikes over the next two to three quarters.

• Liquidity conditions are expected to strengthen due to FCNR-B inflows and further RBI actions.
• The bank projects its net interest margin (NIM) to increase to 3% in FY27.
• This marks an increase from the 2.86% recorded in Q1 of the current fiscal year.

Advances Growth and Capital Replacements

For credit growth, SBI expects advances to align with India’s nominal gross domestic product (GDP) growth. This growth is estimated at approximately 12% in FY27.

• SBI typically grows 2-3 percentage points faster than the nominal GDP.
• Credit growth has shown consistency across all products in the first two quarters of the financial year.
• The bank is also developing models for expected credit loss (ECL) norms, with technology platform testing slated for completion this month.
• SBI may issue another tranche of additional tier-1 (AT-1) bonds.
• This issuance aims to replace Rs 6,000-8,000 crore of maturing five-year AT-1 bonds.

Raising tier-2 bonds is not currently feasible due to high yields, though this could be re-evaluated towards late 2026 if yields soften. Setty also clarified he is unaware of any proposal for SBI to acquire other public sector banks.