Bank earnings set to rise modestly as RBI deposit swap fuels deposits

Nifty 50 banks are projected to raise net interest income by 11.5% in the September quarter. Their net profit growth is expected to be slower, around 10% for the same period. The RBI's FCNR‑B deposit‑swap scheme is bringing robust capital inflows that strengthen deposit growth for these banks. Axis Bank and Kotak Mahindra Bank are expected to record the strongest profit gains among the group. The Nifty 50 banking index, which follows the top listed Indian banks, reflects these earnings trends. Together, higher interest earnings and steady deposit inflows underpin the modest profit rise despite tighter margins.

Context

The FCNR‑B swap allows foreign‑currency deposits held by non‑residents to be exchanged for rupee‑based deposits, giving banks a cheaper source of funds. Such schemes are used by the RBI to deepen domestic liquidity and support banking profitability. In a quarter where interest rates are firm, stronger deposit bases help banks manage funding costs.