Canara Bank has raised $5.8 billion through Foreign Currency Non-Resident (Bank) or FCNR(B) deposits as part of its strategy to retire high-cost bulk funding, according to bfsi.economictimes.indiatimes.com. The bank is also focusing on increasing individual savings and retail term deposits to reduce reliance on Current Account Savings Account (CASA) deposits and lower its overall funding costs.
The bank’s global deposits grew by 11-12 percent year on year, while domestic deposits increased by 10 percent, the report said. Canara Bank is actively shifting its funding mix by prioritizing retail deposits over bulk funding, which typically carries higher interest expenses. This approach aims to improve the bank’s cost of funds and strengthen its balance sheet, a key priority amid competitive banking sector dynamics.
This move by Canara Bank reflects a broader trend among Indian banks to optimize funding sources amid rising interest rates and market volatility. By raising substantial FCNR(B) deposits, the bank taps into stable foreign currency inflows from non-resident Indians, which can be a cheaper source of funds compared to domestic bulk deposits. This strategy aligns with efforts by other public sector banks to enhance deposit quality and reduce dependence on costly wholesale funding.
Canara Bank’s focus on retiring high-cost bulk funding through the $5.8 billion FCNR(B) deposits and increasing retail term deposits marks a significant step in its funding strategy. The bank’s next quarterly results, scheduled for release in October, will provide further insight into the impact of these measures on its net interest margin and overall financial health.