Bank Stocks Rally After RBI Reports $136.38 Bn Inflows Through Special Forex Swap Window

Banking stocks rallied on Thursday after the Reserve Bank of India said total inflows reached $136.377 billion through its special forex swap window to bolster foreign-exchange liquidity.

The fresh numbers from the central bank triggered buying across the banking space, with major lenders leading the gains.

Axis Bank emerged as the top gainer among the 30 Sensex constituents, climbing 1.37% to ₹1,272.15 apiece on the BSE. HDFC Bank rose 1.16% to ₹709.10, ICICI Bank advanced 1.08% to ₹1,443.45 and State Bank of India gained 1.07% to ₹1,031.65.

Kotak Mahindra Bank was the only laggard among the Sensex constituents, slipping 0.22% to ₹423.70.

RBL Bank was among the strongest performers, jumping 5.10% to ₹409.35.

The rally was broad-based across the banking space. The BSE PSU Bank surged 1.45%, while the BSE Private Banks Index gained 0.87%. Bankex and BSE Top 10 Banks advanced 0.76% and 0.75%, respectively.

The broader market was also in positive territory, with the 30-share BSE Sensex gaining 144.11 points to 76,714.46 and the NSE Nifty rising 20.10 points to 23,934.55.

The RBI on Wednesday said India mobilised a record $127.23 billion through Foreign Currency Non-Resident (Bank), or FCNR(B), deposits, as of August 31.

Including overseas foreign-currency borrowings (OFCB) and external commercial borrowings (ECB), total inflows under the measures reached $136.377 billion.

The strong response prompted the RBI to close the special FCNR(B) window a month ahead of schedule. The facility, launched on June 8, was initially scheduled to remain open until September 30 but was closed on August 31 after the central bank said its objective had been achieved ahead of schedule.

FCNR(B) deposits are fixed-term deposits held in foreign currencies, with the principal and interest repaid in the same currency, shielding depositors from direct rupee exchange-rate risk.

The arrangement allows non-resident Indians to place foreign-currency funds with Indian banks without taking direct rupee-currency risk.

The inflows provide the RBI with a larger pool of foreign currency to manage external pressures and support liquidity in the foreign-exchange market, particularly if rupee volatility intensifies.

They also highlight India's ability to tap its roughly 35-million-strong overseas diaspora for hard currency when global financial conditions become more challenging.

While the RBI did not provide bank-wise mobilisation figures, ICICI Bank separately said it had mobilised gross $17.88 billion through FCNR(B) deposits up to August 31.

Private sector lender RBL Bank on Wednesday said it had garnered $3.4 billion through FCNR(B) deposits up to August 31.