A Kotak Institutional Equities research note says banks’ funding constraints have eased significantly, aided by USD 136 billion of inflows through FCNR, external commercial borrowings (ECB) and overseas foreign currency bonds (OFCB). The inflows have improved deposit availability and lowered the cost of funds for banks.
The inflows came via three channels:
- FCNR deposits
- External Commercial Borrowings (ECB)
- Overseas Foreign Currency Bonds (OFCB)
According to the note, easier access to deposits and lower funding costs could influence banks’ ability to fund lending and manage interest margins, with potential implications for borrowers, investors and regulators concerned with financial stability and liquidity in the sector.
