RBL Bank raises $150 million via FCNR route, eyes NRI deposits to fund next leg of growth

RBL Bank raised around $150 million through Foreign Currency Non-Resident (FCNR) deposits in about a month as the new ENBD-owned lender leverages the non-resident Indian pool in West Asia, management said in its June quarter (Q1 2027) earnings call.

Managing director and chief executive officer R. Subramaniakumar refused to commit to the fund-raising target, saying the bank would “take action as much as possible” before the September 30 deadline of the plan. The bank is working on two fronts, through a partner bank and its own base of NRI relationships.

The fundraise comes after Emirates NBD acquired a majority stake in RBL Bank on June 18 through a capital infusion of around $2.75 billion, the largest foreign direct investment in the Indian banking sector.

FCNR deposit allows NRIs to park their foreign exchange earnings in India and also earn tax-free interest without taking the risk of rupee depreciation. In June, the Reserve Bank of India opened a window until September 30 in which the government bears hedging costs on banks’ new three- to five-year FCNR(B) deposits, making it cheaper to raise funds.

On strategy, the bank has identified trade finance and “flow business” as its two main areas for product innovation, while expanding existing products to a wider geography. Management has said merger and acquisition financing is not an active focus, but it will pursue specific opportunities with backers and business groups it is comfortable with.

Earning

RBL Bank reported net profit ₹254 crore in the June quarter, up 27% from the previous year. Net interest margin narrowed to 4.13% from 4.50% last year and to 4.41% in the previous quarter due to lower advance yields despite lower funding costs. Asset quality improved; gross non-performing assets decreased from 2.78% to 1.30% in the previous year and net NPAs stood at 0.37%.

The credit card business remained the weak spot for the quarter. of the bank ₹597 crore net provision for advances, ₹575 crore came from the card portfolio. Subramaniakumar attributed this to “transitional stress” from the two-year revision of the portfolio rather than economic weakness or high defaults.

He said stress will peak at the end of this quarter, after which the portfolio will stabilize before returning to growth over the next few quarters.

Management predicted net interest margin would recover to the 4.8-4.9% range by the end of the year due to high-cost borrowing and depletion of deposits, but said the outlook remained uncertain. Impact of RBI policy, FCNR inflows and fresh equity capital.

The bank also said it remains “cautious” about its exposure to West Asia in light of early signs of conflict and inflationary pressure in the region, but said it had not seen a significant impact on its portfolio so far.