Bank of India plans to raise $1.2 billion through FCNR-B deposits and $2 billion via overseas borrowing to strengthen its foreign currency reserves. This strategic shift aims to lower funding costs by reducing reliance on expensive domestic bulk deposits. The bank recently reported a 36% year-on-year jump in net profit for the first quarter.
Detailed Coverage
Bank of India is undertaking a significant capital mobilization exercise to bolster its foreign currency reserves and optimize its liability profile. The state-owned lender is looking to raise $1.2 billion through Foreign Currency Non-Resident (FCNR-B) deposits and an additional $2 billion through overseas borrowings. According to bank management, $200 million has already been successfully mobilized through the FCNR-B window.
This strategy is designed to improve the bank’s funding efficiency. By tapping into foreign currency sources, the bank aims to reduce its dependence on higher-cost domestic bulk deposits. If successful, the management expects this shift to potentially lower overall deposit costs by 50 to 60 basis points, which could provide support to net interest margins over time. To attract these funds, the bank is offering interest rates of up to 9% to non-resident customers.
Financial Performance and Asset Quality
The fund-raising plan follows a strong financial showing for the quarter ended June 2026. Bank of India reported a net profit of Rs 3,068 crore, marking a 36% increase compared to the same period last year. This performance was supported by a 12.6% rise in net interest income, which reached Rs 6,833 crore, and a 19% growth in non-interest income totaling Rs 2,579 crore. The bank's advances grew by 18.6% to Rs 7.98 lakh crore, while total deposits increased by 14.9% to Rs 9.58 lakh crore.
Asset quality continues to show improvement, with the bank reporting gross non-performing assets at 1.81%. This is a notable shift from previous years, reflecting better loan recovery and risk management. Despite this, the bank's net interest margin stood at 2.52%, reflecting the competitive pressures on interest rates in the current banking environment.
Strategic Operational Changes
Beyond capital mobilization, Bank of India is restructuring its internal sales approach. The lender has launched a centralized sales vertical and a dedicated strategic business branch in Mumbai. These moves are intended to streamline high-value transactions and improve credit delivery.
For investors, the key monitorable will be the bank's ability to maintain its deposit growth while managing the cost of funds. While moving toward cheaper foreign funding is a positive step for liability management, investors may also track the pace of loan book expansion and the sustainability of interest margins in the coming quarters. The bank’s progress in achieving its $3.2 billion target will likely be reflected in future updates regarding its liquidity position and interest expense trends.