South Indian Bank (SIB) is eyeing inflows of about $1 billion via fresh FCNR (B) deposits by September-end 2026, encouraged by RBI’s move to bear the full hedging cost on such deposits.

Towards this end, the Thrissur (Kerala) – headquartered private sector Bank is banking on its long-standing relationship with its NRI customers, according to Dolphy Jose, Executive Director.

SIB is also talking to 3-4 foreign banks, including those based in West Asia, so that its NRI customers can raise loans on the strength of stand-by letter of credit (SBLC) issued by it and place the proceeds as FCNR (B) deposits with it.

“FCNR is a pricing game. So, we are aggressive because this is the ideal time to give the best pricing possible to our existing FCNR (B) depositors and get fresh growth,” Jose said.

Banks have turned aggressive in pricing FCNR (B) US Dollar deposits in the 3-5 years tenor,, with interest rates being upped to 6-7 per cent thereabouts, from the earlier 3 per cent odd levels.

The sharp rise in interest rates on FCNR (B) deposits follows RBI’s measures to bolster Dollar inflows, including by bearing the full hedging cost for fresh 3–5-year FCNR (B) deposits raised up to September-end 2026.

The central bank has also temporarily exempted banks from maintaining statutory pre-emptions -- cash reserve ratio and statutory liquidity ratio on the fresh deposits.

NRI deposits accounted for about 29 per cent of the Bank’s total deposits of ₹1,23,346 crore as at March-end 2026.

On US Dollar deposits of up to $0.5 million and above $0.5 million, the highest interest rate that SIB is now offering is 6.50 per cent and 7 per cent, respectively, on three maturity buckets – 2 years to less than 3 years, 3 years to less than 4 years and 4 years to less than 5 years.

“We are targeting to mobilise about $1 billion dollars through FCNR (B) deposits. Even if we achieve 75 per cent of this, it’s good enough. So, we have a ballpark target...we want to get to that kind of number,” Jose said.

Published on June 26, 2026