India Banks: FCRN mobilization remains healthy; Funding Cost Relief for Banks and NBFCs

Research evidence excerpt

India Banks: FCRN mobilization remains healthy; Funding Cost Relief for Banks and NBFCs

J P M O R G A N Asia Pacific Equity Research

04 August 2026

India Banks

FCNR mobilization remains healthy; Funding Cost

Relief for Banks and NBFCs

• Banks’ NIMs to be supported: Indian banks are likely to be the key direct India Financials

AC beneficiary of the FCNR flows by easing domestic liquidity constraints. FCNR Anuj Singla

flows should help bridge the significant gap between domestic credit (17.7%) (91-22) 6157-3590

and deposit growth (12.6%) and help assuage investor concerns on the anuj.singla@jpmchase.com

longevity of the credit growth momentum (our base case is mid-teens growth). J.P.Tower,MorganSantacruz(E),India PrivateMumbaiLimited,- 400098,J.P. MorganSEBI

We see Indian banks to benefit from: (i) NIM benefit with the total landed cost Registration: INH000001873, (91-22) 6157-3000.

of FCNR deposits (including coupon hedging) likely to be significantly lower Harsh Wardhan Modi

than the cost of domestic wholesale as well as term deposits. We estimate the (65) 6882-2450

potential for a mid-single digit direct positive impact on NIMs of large Indian harsh.w.modi@jpmorgan.com

J.P. Morgan Securities Singapore Private Limited/

private sector banks in a scenario where FCNR flows range between US$50- J.P. Morgan Securities (Asia Pacific) Limited/ J.P.

80bn, (ii) Secondly, we believe that FCNR should also help facilitate higher Morgan Broking (Hong Kong) Limited

growth at select banks (HDFC Bank), where the constrained deposit Shivansh Puri, CFA

environment has been challenging the growth outlook. While HSBC/SBIN/ (91-22) 6157-5077

ICICIBC (Table 1DepositsvsincrementalFCNRBmarketshare) account for the largest share of incremental FCNR flows shivansh.puri@jpmchase.com

J.P.