NRI Deposits Likely to Push Bank Deposit Growth to 15% in FY27: SBI Research

New Delhi- Inflows into Foreign Currency Non-Resident (Bank) or FCNR-B deposits are expected to strengthen India's banking sector by raising overall deposit growth to around 15 per cent in FY27, helping reduce the gap between deposit and credit growth, according to a report by SBI Research.

The report said banks have already mobilised nearly $13-14 billion through the FCNR-B deposit scheme, providing a significant boost to their deposit base during the current financial year.

Despite this, bank lending has continued to grow faster than deposits since FY23. For the fortnight ending June 30, bank credit expanded by 18.6 per cent year-on-year, while total deposits increased by 13.3 per cent, resulting in a credit-deposit gap of 5.3 percentage points.

SBI Research noted that this imbalance is not merely a short-term liquidity issue but reflects long-term structural changes in both savings patterns and credit demand following the Covid-19 pandemic.

The report observed that deposit growth in major metropolitan cities has slowed as these markets have matured. In contrast, semi-urban and rural regions are emerging as key contributors to deposit mobilisation, supported by higher household incomes, women-focused welfare schemes and deeper banking penetration.

Meanwhile, urban households are increasingly investing their savings in market-linked financial products such as mutual funds and equities, reducing the share of traditional bank deposits.

On the lending front, credit growth has become more diversified after regulatory measures curbed unsecured personal loans. Banks are now seeing stronger demand from industries, infrastructure projects, working capital financing and gold-backed loans, with support from the Emergency Credit Line Guarantee Scheme (ECLGS).

The report also pointed out that supply-side pressures, including high crude oil prices and geopolitical uncertainties, tend to affect credit growth more than deposit mobilisation, contributing to continued liquidity pressures within the banking system.

However, SBI Research said Indian banks remain in a strong financial position, backed by healthy capital adequacy levels and low non-performing assets (NPAs). It described the banking sector as being in a "Goldilocks" phase, with credit growth expected to remain robust, driven by consumer demand and capital expenditure, while banks continue to maintain prudent balance-sheet management.

With inputs from IANS