Indian banks are adopting different strategies to deploy funds raised through Foreign Currency Non-Resident (Bank) [FCNR(B)] deposits as pressure on lending margins continues. According to a report, some lenders are using the funds to support loan growth, while others are repaying higher-cost deposits or extending overseas loans. The deposits have strengthened banks’ funding positions but increased near-term pressure on net interest margins due to funding costs and relatively low returns on certain loans. Banks expect the impact to ease as funds are deployed more efficiently.
