State-owned Indian Bank is targeting $2 billion in foreign currency deposits under the Reserve Bank of India's (RBI) special FCNR(B) deposit window, with $140 million already achieved, said managing director and chief executive officer Binod Kumar in an interview. The key challenge is pricing, not demand for foreign currency, and banks should support RBI's objective of attracting dollar inflows, even on a ‘no-profit, no-loss’ basis if required.
“We have set a target of mobilising around $2 billion before the window closes, and I am hopeful we will achieve it. We already have a pipeline of nearly $1 billion. Once those transactions are completed and converted, we should be able to achieve the target," said Kumar.
Other PSU banks have similar targets, for instance Punjab National Bank is chasing $2.5-3 billion.
This follows RBI's decision in June to introduce a temporary dollar-rupee swap facility for fresh FCNR(B) deposits mobilized between 8 June and 30 September 2026, with swap access available until mid-October. Higher FCNR(B) inflows would strengthen banks' foreign-currency resources, improve liquidity, support the country's foreign-exchange reserves, and provide an additional cushion for the rupee.
Finance minister Nirmala Sitharaman is holding a high-level review with state-run banks on foreign currency mobilization on Monday, as Mint had reported earlier.
FCNR(B) deposits are fixed-term foreign currency deposits maintained by NRIs, Persons of Indian Origin and Overseas Citizens of India in designated foreign currencies such as the US dollar, pound sterling, euro, Japanese yen, Canadian dollar and Australian dollar. Since the deposits remain denominated in foreign currency, depositors are insulated from exchange-rate fluctuations, while both principal and interest remain freely repatriable.
Kumar further added that the only challenge is pricing. Banks should not be greedy.
“We should understand why RBI has opened this FCNR(B) window. The objective is to bring more dollars into the country after significant foreign currency outflows. Even if we have to participate on a no-profit, no-loss basis, we should do so. There is no shortage of dollars; the key issue is pricing. Even if we have to raise funds at a slightly higher cost, I am comfortable with that,” he added.
While talking about the MSME portfolio, due to the geopolitical situation, particularly among exporters, he said that the bank has not seen any major impact.
“Our MSME gross NPA has improved from 7.99% to 4.69% year-on-year, and sequentially from 4.73% to 4.69%,” he said. Kumar said he expected some sectors to face pressure. However, exporters have shown surprising strength, with no major stress evident so far. He credited this to robust domestic consumption and the government taking on much of the increase in fuel costs, which has likely protected many sectors from strain.
On the growth outlook for the retail, agriculture and MSME (RAM) portfolio in FY27, Kumar said he expects RAM credit to grow by around 15-16%.
“This quarter, it grew 14.8%. Retail grew about 19%, MSME about 17%, while agriculture grew nearly 10%. Agriculture growth was slower because of the revised RBI gold loan guidelines that became effective from 1 April, but the segment has started picking up,” he added.
Regarding the recovery guidance for FY27, he said banks have guided recoveries of ₹4,500-5,500 crore. “During the first quarter itself, recoveries stood at around ₹1,845 crore,” he added.
On the technology front, they said there is an overall IT budget of around ₹2,000 crore, covering IT infrastructure, artificial intelligence, quantum technologies, and other digital initiatives.