Moody’s says non-resident dollar deposits support Indian banks’ liquidity

FILE PHOTO: A screen displays the Moody’s logo on the trading floor of the New York Stock Exchange (NYSE) in New York City, U.S., August 21, 2026. REUTERS/Jeenah Moon/File Photo

Sept 9 (Reuters) – Ratings agency Moody’s said on Wednesday (September 9, 2026) foreign currency non-resident (bank) or FCNR(B) deposits raised under the special swap facility of India’s central bank will strengthen funding and liquidity for banks.

Here are some key details:

• The Reserve Bank of India said on September 3 that banks had attracted $136.38 billion under its forex swap facility as of August 31, with most of the funds coming through a dollar deposit scheme aimed at the Indian diaspora.

• Moody’s said the inflow of FCNR(B) deposits is credit positive and will help contain a rise in banks’ loan-to-deposit ratios.

• The deposits are likely to reduce pressure on banks to compete aggressively for domestic deposits and could allow some lenders to replace higher-cost wholesale funding, Moody’s said.

• The ratings agency added that the deposits, which have maturities of three to five years, improve funding stability but create refinancing and maturity-concentration risks as a significant volume was mobilized in a short time.