Private bank chiefs temper NRI deposit mop-up expectations; Top lenders stay cautious, say several factors affect inflows

Private bank chiefs temper expectations for RBI's FCNR(B) deposit scheme, citing tax rules, overseas liquidity, and regulatory constraints.

HDFC Bank MD Sashidhar Jagdishan said jurisdiction outside the Middle East and Singapore are unattractive due to gross interest taxation, likely reducing inflows from initial $60-80 billion estimate to around $50-55 billion.

Kotak Bank MD Ashok Vaswani said the quantum of inflows depends on tie-ups with partner banks to provide leverage.

Liquidity constraints in West Asia, including central banks in UAE and Oman discouraging leverage and requiring higher buffers, have reduced the amount banks can raise.

HDFC Bank faces an embargo by UAE regulator on onboarding new customers and an advisory by Central Bank of UAE on foreign representative offices.