Indian Bank eyes $2 bn FCNR (B) deposits by Sept; already mobilised $140 mn

CHENNAI: The Chennai-based public sector Indian Bank is confident of mobilising $2 billion through Foreign Currency Non-Resident (Bank), or FCNR(B), deposits by September, with a pipeline of around $1 billion already in place, as it looks to capitalise on the Reserve Bank of India's temporary relaxation of interest rate ceilings on fresh deposits.

The RBI, last month, temporarily withdrew the interest rate ceiling on fresh FCNR(B) deposits of three-to-five-year maturity until September 30, opening a limited window for banks to attract foreign currency flows.

“My plan is to raise around $2 billion,” Indian Bank MD-CEO Binod Kumar said during a media interaction here on Friday, after the bank's net profit rose 10.09 per cent year-on-year to Rs 3,273 crore in the June quarter.
Clarifying the bank's mobilisation plans, he said the lender already has a pipeline of about $1 billion and is confident of reaching $2 billion by September.

The bank has mobilised around $140 million in fresh FCNR flows following the regulatory relaxation. Its outstanding FCNR deposits stood at $457 million as of March 2026. Indian Bank is offering around 6 per cent on FCNR deposits. Kumar said the effective annualised return for customers could work out to 13-14 per cent. “On dollar, when do you expect this type of return? Never. It is a good opportunity for them,” he elaborated.

The FCNR push comes as banks face pressure on low-cost domestic deposits, with customers increasingly behaving as investors rather than savers. “CASA will be under stress,” Kumar said, adding that banks need multiple strategies to retain transaction floats.

Indian Bank's CASA deposits, however, grew 15.3 per cent, with the domestic CASA ratio improving to 39.73 per cent.

The bank revived 17 lakh inoperative accounts in the June quarter, adding Rs 1,469 crore to savings balances. Digital transactions accounted for 95 per cent of total transactions, while its virtual banking platform serves 1.31 crore customers entirely digitally, representing nearly Rs 98,000 crore of business.  The bank aims to double this to Rs 2 lakh crore this fiscal.
The strategy to revive inactive accounts too has aided the bank in garnering around Rs 2,000 crore.

Retail and MSMEs remain key growth areas, with advances rising 18.74 per cent and 17.03 per cent, respectively. Auto loans grew around 33 per cent, while housing loans expanded about 14 per cent.

Kumar said the bank has so far seen no stress among MSMEs or exporters from global uncertainties. “I am positively surprised,” he said, adding that even leather and textile businesses remained resilient.

Infrastructure advances grew 34 per cent, driven by green energy, battery storage and data centres. The bank has underwritten two large data centre projects, with its financing share at around Rs 4,000 crore each. “With the way AI is coming, everybody needs data centres,” Kumar said.

For the June quarter, Indian Bank's operating profit grew 16.5 per cent. Gross advances increased 13.89 per cent and deposits 13.47 per cent. Gross NPA declined to 1.86 per cent from 3.01 per cent a year earlier.

Key Highlights of performance in June quarter 2026

Net profit up by 10.09% YoY at Rs 3,273 cr in June 2026 (Rs 2,973 cr in June 2025)

Operating Profit improved by 16.50% YoY to Rs 5,557 cr in June 2026 from Rs 4,770 cr in June 2025

Net Interest Income increased by 16.92% YoY to Rs 7,435 cr in June 2026 from Rs 6,359 cr in June 2025

Domestic Net Interest Margin improved to 3.41% in June 2026 from 3.35% in June 2025

Cost to Income Ratio reduced by 98 bps to 44.80% in June 2026

Cost of Deposits reduced by 34 bps to 4.80% in June 26 from 5.14% in June 2025

Cost of funds reduced by 40 bps to 4.83% in June 2026 from 5.23% in June 2025

Yield on Investments stood at 6.96% in June 2026

Gross Advances increased by 13.89% YoY to Rs 6,84,623 cr in June 2026 from Rs 6,01,147 cr in June 2025

RAM (Retail, Agriculture & MSME) advances grew by 14.80% YoY to Rs 4,16,992 cr in June 2026 from Rs 3,63,221 cr in June 2025

RAM contribution to gross domestic advances increased to 66.00%. Retail, Agri & MSME advances grew by 18.74%, 9.96% and 17.03% YoY respectively. Home Loan (including mortgage) grew by 13.36% YoY

Total business increased by 13.66%

Gross Advances increased 13.89%, while deposits rose 13.47% anchored by a robust CASA share of 39.73%