FCNR-B: Clarity on Foreign Branch Leveraging Key; Watch out for FAQ from RBI

Research evidence excerpt

FCNR-B: Clarity on Foreign Branch Leveraging Key; Watch out for FAQ from RBI

India | Financials EquityJuneResearch12, 2026

FCNR-B: Clarity on Foreign Branch Leveraging Link to our recent report:

Key; Watch out for FAQ from RBI FCNR-B Deposits: What Do Banks' New

Rates Tell?

Our conversations with banks (Indian and global) indicate that they are

hoping that the RBI allows their foreign branches to lend to customers, FCNR-B Announced, But Clarity on

Leverage Key to Large-scale Inflows

who in turn will place FCNR-B deposits with the Indian branches of the

same bank. After 2013, this window was restricted due to concerns about Terms of FCNR-B and ECB Allow Leverage

grossing up of flows, but banks feel that reopening this window for special That Can Boost Forex Inflows

FCNR-B will reduce friction, client-privacy and counterparty risks, aiding

higher FCNR-B mobilisation.

Exhibit 1 - We estimate that with 7-10x leverage, customers can generate 14-18% US$ IRR annually

over 3-5 years with large banks & 22-29% with smaller banks

Leverage of 7x Leverage of 10x

Data in US$ Large Bks Small Bks Large Bks Small Bks

Total FCNR(B) deposit placed 8,000,000 8,000,000 11,000,000 11,000,000

NRI equity contribution / own funds 1,000,000 1,000,000 1,000,000 1,000,000

Borrowed funds used for deposit 7,000,000 7,000,000 10,000,000 10,000,000

Implied leverage multiple 7x 7x 10x 10x

FCNR(B) deposit yield in India 6.00% 7.00% 6.00% 7.00%

Interest income on FCNR(B) deposit 480,000 560,000 660,000 770,000

Cost of borrowed funds 4.85% 4.85% 4.85% 4.85%

Interest cost on borrowed funds 339,500 339,500 485,000 485,000

Spread 1.15% 2.15% 1.15% 2.15%

Net interest income to NRI depositor 140,500 220,500 175,000 285,000

Return on NRI equity/ IRR 14% 22% 18% 29%

.

Source: Bloomberg, Jefferies