HDFC, ICICI and Axis Bank executives declined to disclose FCNR(B) figures on earnings calls, while public-sector rivals published targets. Market estimates peg total inflows at $12-15 billion so far.
Forty-five days after India launched a new foreign currency deposit scheme, the country's largest private banks are not saying how much they have collected. Their public-sector rivals are talking openly about targets and totals.
Executives at HDFC Bank, ICICI Bank and Axis Bank – India's first, second and third-largest private lenders – held their June-quarter earnings calls on Saturday without disclosing FCNR(B) deposit figures. All three said response from non-resident Indians had been strong. Market estimates peg inflows so far at $12-15 billion, with earlier projections of as much as $40 billion by the time the scheme closes on Sept. 30.
HDFC Bank CEO Sashidhar Jagdishan said the bank had raised "a substantial amount" in recent days. "The numbers, we don't want to detail at this juncture, you will see over the next three months at the right time when the issue closes," he said on a post-earnings call July 18.
HDFC is raising FCNR deposits through direct deposits, leverage it provides itself, and leverage arranged through overseas partner banks. "At 6% plus, it is extremely attractive… even without leverage, it is very attractive, and you'll be surprised how small-ticket NRI customers are also lining up for this kind of opportunity," Jagdishan said.
The scheme, announced June 5 and valid through Sept. 30, lets banks raise FCNR(B) deposits of three to five years and swap the dollars with the Reserve Bank of India at a concessional rate.
ICICI Bank executive director Sandeep Batra said deposits picked up only after the RBI issued operational clarifications. "This is an activity which started effectively only towards the end of June, once all the FAQs etc. had come out. So, it will evolve over the second quarter," he said.
Axis Bank CEO Amitabh Chaudhry said the scheme was drawing strong interest from NRI customers and offered a meaningful opportunity to strengthen deposits. "During the course of this quarter, we'll do the mobilization based on what is best for our franchise," he said, cautioning against focusing only on leverage multiples. CFO Puneet Sharma said the bank expects to gain market share through the programme. A clearer picture will only come next quarter.
Public-sector banks have been far more open. Union Bank of India is aiming for $1.5-2 billion in FCNR deposits by September. It has raised $106 million without leverage, MD Asheesh Pandey said July 15. Punjab National Bank has received $419 million and targets $2.5 billion, plus a $500 million overseas bond issue, for total overseas flows of $3 billion. Indian Bank has collected about $150 million and expects $1.5-2 billion by the scheme's end. Central Bank of India has $8.4 million and targets $400 million. Bank of Maharashtra raised its five-year FCNR deposit rate to 6.60% and expects inflows to pick up in August and September.
Barclays said in a July 16 report that FCNR-B inflows have been "reportedly around $5-6 billion." Some of that may have been limited by earlier uncertainty about leverage and whether banks could use their GIFT City branches to mobilise deposits. Around $2 billion may have been drawn by State Bank of India alone, the report said.
Kotak Mahindra Bank CEO Ashok Vaswani said NRI customer demand was "very strong because it is such an attractive opportunity. It is our ability to kind of get the supply side done, which is going to make the difference." He declined to share internal targets.
Among mid-sized private lenders, Federal Bank and Yes Bank said they had started receiving both leveraged and unleveraged inflows without revealing amounts. Federal Bank is offering leverage of 8-12 times. Yes Bank MD Vinay Tonse said the bank is capping leverage at nine times. It has already exhausted existing limits and is awaiting additional lines. RBL Bank is the sole private bank to declare a figure – $150 million – without saying how much it plans to raise total.
The muted disclosures come against a slower-than-expected start. Bankers initially grappled with tax concerns among NRIs in markets like the U.S. and the U.K., uncertainty over the source of flows, and operational clarifications that arrived only in late June. The RBI and the government separately met lenders in mid-July to push better promotion of the scheme.
A circular by the UAE central bank in early July restricted certain activities by representative offices of foreign banks, including documentation support and cross-selling. That dampened expectations from the biggest market for such deposits. Bankers expect the Indian government and RBI to take up the matter with the UAE central bank.
The RBI has asked banks to report daily FCNR data and met with bank chiefs July 14. The government met bank officials July 13 to nudge outreach programmes.
Barclays said in an earlier report it expected potential FCNR flows of $25-30 billion as a reasonable base case over the next few months with upside risks. It did not expect a repeat of the large inflows seen in 2013. "The pace of take-up so far has indeed been lower than the run rate that would be expected by the lofty market expectations of around $40-50 billion, with some having expected inflows of up to $70 billion," the report said.
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