Bank of India is targeting 1.2 billion dollars in foreign currency non resident deposits under the special exercise the Reserve Bank has run to pull dollar inflows into the system, and plans a further 2 billion dollars through overseas borrowing. Managing director Rajneesh Karnatak said the bank has raised 200 million dollars through the FCNR window so far.
The motivation is the cost of money rather than the headline. If the bank hits the 1.2 billion dollar target it translates to roughly 10,000 to 11,000 crore rupees, and Karnatak said that would let the bank substitute its reliance on bulk deposits and bring the cost of deposits down. Asked how much, he put the saving at 50 to 60 basis points against bulk deposits. The bank is offering up to 9 percent leverage to non resident customers to maximise what the window brings in.
The scale of the wider exercise is worth noting. Reserve Bank data showed that up to 17 July Indian lenders had together raised close to 21 billion dollars across the dedicated programmes aimed at boosting foreign exchange flows. That is a system level response to currency pressure, executed through the deposit book rather than through intervention alone.
The results came alongside the deposit plan. First quarter net profit rose 36 percent to 3,068 crore rupees and operating profit rose 26 percent to 5,051 crore, on net interest income up 12.6 percent at 6,833 crore and non interest income up 19 percent at 2,579 crore. Net interest margin was 2.52 percent against 2.55 percent a year earlier. Advances grew 18.6 percent to 7.98 lakh crore and deposits 14.9 percent to 9.58 lakh crore, while gross non performing assets improved 111 basis points to 1.81 percent.