New Delhi: Private banks outpaced public-sector lenders in deposit growth during the July–September quarter of FY27, against the backdrop of strong foreign-currency inflows under the Reserve Bank of India’s concessional swap window.
Provisional disclosures compiled by PTI showed year-on-year deposit growth of 17–34 percent among the private banks covered, compared with 6.87–17.01 percent among state-owned lenders. The figures, however, include a mix of domestic and global deposits, limiting direct comparisons.
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RBL Bank led the private-sector group with 34 percent growth, followed by Kotak Mahindra Bank at 23.2 percent and Axis Bank at 20.7 percent. YES Bank reported 19.5 percent growth, HDFC Bank 18.8 percent, South Indian Bank 18.70 percent and IDFC First Bank 17 percent.
Among public-sector lenders covered, Bank of Baroda reported the strongest domestic deposit growth at 17.01 percent, while its global deposits rose 16.75 percent. Central Bank of India posted 14.43 percent growth, UCO Bank 14.05 percent and Punjab and Sind Bank 12.98 percent.
Canara Bank’s global deposits increased 13.13 percent and domestic deposits 10.96 percent. Punjab National Bank reported corresponding growth of 9.90 percent and 9.44 percent. Indian Bank’s total deposits rose 12.4 percent, while Union Bank of India recorded 6.87 percent growth.
The deposit expansion coincided with substantial inflows through the special Foreign Currency Non-Resident Bank, or FCNR(B), deposit scheme.
"System deposit growth picked up from 11-12 per cent to 17 per cent year-on-year with strong FCNR(B) inflows of USD 133 billion, which accounted for 4.5 per cent of system deposits," Motilal Oswal Financial Services said in a report.
The RBI launched its special dollar–rupee swap facility on June 8, 2026, covering FCNR(B) deposits, overseas foreign-currency borrowings and external commercial borrowings. The deposit window closed on August 31, while the borrowing facilities remain open until December 31.
Banks mobilised USD 133 billion under the FCNR(B) window. These fixed-term deposits repay principal and interest in the same foreign currency, protecting depositors from direct rupee exchange-rate risk. The aggregate inflow figure does not, by itself, establish how much each bank mobilised.
Credit growth also remained strong. Advances at the public-sector banks covered increased 12.59–29.83 percent year-on-year, against 16.3–40 percent among private lenders.
Motilal Oswal put system credit growth at 18.8 percent as of September 15, supported by retail demand, higher credit utilisation by MSMEs and corporate borrowing amid elevated bond yields. Stronger-than-expected FCNR(B) inflows also supported lending momentum, it said.
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The funding surge could nevertheless weigh on private banks’ net interest margins in the near term, the brokerage cautioned, citing rapid balance-sheet expansion and leverage extended against FCNR(B) deposits.
"NIMs are expected to gradually improve as banks deploy the funds for lending and retire high-cost liabilities," the report added.
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