RBL Bank shares moved higher after the private-sector lender reported strong mobilisation of FCNR(B) deposits, with brokerage Citi seeing further upside in the stock.

Citi said RBL Bank has leveraged its promoter's relationship with Emirates NBD to tap a disproportionately large pool of FCNR(B) deposits from the UAE corridor.

FCNR(B) — Foreign Currency Non-Resident (Bank) — accounts are term deposits held by non-resident Indians in foreign currencies such as the US dollar, and are a source of overseas funding for Indian banks. Because FCNR(B) deposits are denominated in foreign currency, the exchange-rate risk sits with the bank rather than the depositor, making them a comparatively stable form of overseas funding when raised at competitive rates. Such deposits have historically been a meaningful funding avenue for Indian banks, notably during periods when the rupee was under pressure and the Reserve Bank of India relaxed interest-rate caps to attract inflows, as seen during the 2013 taper episode.

Access to a large, low-cost overseas deposit pool is particularly relevant at a time when Indian banks have been working to shore up deposit growth to keep pace with credit demand. For RBL Bank, which operates a largely retail- and mid-corporate-focused loan book, cheaper FCNR(B) funding from the UAE corridor could support margins over time, though the actual impact will depend on how the funds are deployed.

Source: CNBC-TV18