RBL Bank has raised approximately $150 million through Foreign Currency Non-Resident (FCNR) deposits in June, as the bank seeks to tap the non-resident Indian market in West Asia. This fundraising effort follows the completion of Emirates NBD's acquisition of a majority stake in RBL Bank on June 18, which involved a capital infusion of about $2.75 billion, marking the largest foreign direct investment in India's banking sector, according to the bank's management during its June quarter earnings call.
Funding Strategy
The FCNR deposit scheme, which allows NRIs to earn tax-free interest while avoiding currency depreciation risks, was opened by the Reserve Bank of India until September 30. Under this scheme, the government covers banks' hedging costs for new three-to-five-year FCNR(B) deposits, making it cheaper for banks to raise funds. RBL Bank's management indicated that they plan to mobilize as much funding as possible before the deadline, leveraging both their partner bank and existing NRI relationships.
Credit Growth Outlook
RBL Bank reported a net profit of ₹254 crore for the June quarter, a 27% increase from the previous year. The bank's net interest margin narrowed to 4.13%, while asset quality improved, with gross non-performing assets declining to 1.30%. The bank aims to reduce reliance on wholesale deposits and enhance its funding base to support credit growth. Managing Director R. Subramaniakumar noted the focus on trade finance and expanding existing products across a wider geography.
Related coverage: RBL Bank to Expand Trade Finance Following Emirates NBD Deal.
The successful fundraising through FCNR deposits is likely to enhance RBL Bank's liquidity position, which could positively influence its lending capacity and credit growth. Investors will watch for further developments in the bank's fundraising efforts as the September 30 deadline approaches.