New Delhi, Aug 22: India’s banking sector is expected to see stronger earnings in the financial year 2026-27, supported by rising FCNR deposits, steady demand for loans and stable asset quality.
According to an assessment by ICICI Securities, increased FCNR deposits could improve banks’ funding position and support lending activity. The brokerage expects overall bank credit growth to remain healthy at around 15 per cent year-on-year in FY27.
The additional foreign currency deposits are likely to strengthen banks’ balance sheets and provide greater flexibility to meet growing credit requirements. Improved funding conditions could also support banks’ net interest income (NII) and profitability.
Loan demand has remained steady across key segments, while asset quality at major banks continues to remain broadly stable. This is expected to give lenders greater confidence to expand their credit portfolios without a significant rise in credit costs.
The banking sector is also benefiting from improved liquidity conditions, with FCNR inflows providing additional support to the financial system. Continued deposit mobilisation is expected to help banks maintain lending momentum in the months ahead.
The improved earnings outlook comes as banks step up efforts to attract FCNR deposits following the Reserve Bank of India’s decision to advance the closure of its concessional dollar-rupee swap facility.
With credit demand remaining firm and asset quality under control, Indian banks are entering FY27 on a more positive footing. Stronger funding, healthy loan growth and stable credit costs are expected to support business expansion and earnings growth across the banking sector.
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