ICICI Bank mobilised $17.88 billion through FCNR(B) deposits under RBI’s swap window, boosting its balance sheet despite impending margin pressures, with global brokerages maintaining buy ratings amid cautious optimism.
ICICI Bank’s latest foreign-currency deposit drive has put it in an unusual position: near-term margin pressure, but a stronger balance sheet outlook. The lender said it had mobilised $17.88 billion through FCNR(B) deposits by August 31, the closing date of the Reserve Bank of India’s concessional swap window, a result that helped lift investor confidence even as it set up a temporary squeeze on margins.
The scale of the inflow has drawn a positive response from global brokerages. UBS and Citi have both kept their “Buy” ratings on the stock, with target prices of Rs 1,800 and Rs 1,770 respectively, according to NDTV Profit. Citi said the bank had “punched above its weight” in raising FCNR(B) deposits and argued that the proceeds could support a material expansion in lending capacity and earnings over time. UBS, meanwhile, said the mobilisation had come in well ahead of expectations.
The immediate trade-off is profitability. Citi estimated that the overseas margin on these deposits could fall by 50 basis points to 0.5% by the first quarter of fiscal 2027, while overall net interest margins may ease by 10 to 20 basis points over the next two quarters. In banking, net interest margin is the spread between what a lender earns on loans and what it pays for deposits; a wider balance sheet can still be positive even if that spread narrows temporarily.
The Reserve Bank of India introduced the swap facility in June to shore up external-sector resilience and foreign-exchange liquidity. Finance ministry data showed that India had attracted $65.40 billion under FCNR(B) deposits by August 21, underscoring the strong response across the banking system. The RBI later shut the window early, after the original closing date had been set for September 30, 2026.
ICICI Bank said its FCNR(B) mobilisation was accompanied by $9 billion in loans from international branches and subsidiaries against those deposits, plus $3.63 billion in standby letters of credit issued to other banks. It also disclosed $3.55 billion of dollar bonds sold in July and August. UBS said the FCNR(B) deposits now account for about 9% of the bank’s outstanding deposits, while the related loans represent roughly 5% of outstanding loans, suggesting the bank has retained room to deploy the funding more broadly.
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