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Punjab & Sind Bank Seeks RBI Relaxation on FCNR(B) Deposits While Targeting 4 Lakh Crore Business Mix by FY29
Punjab & Sind Bank (PSB) is looking to the Reserve Bank of India for a regulatory shift that could unlock higher rates on its FCNR(B) deposits, a move the state‑run lender says will broaden its appeal to non‑resident Indian savers.
The bank has already sent a feeler to the RBI and is awaiting a decision that would allow banks without overseas branches to offer rates that rival those available to lenders with foreign outlets. PSB’s chief executive, Swarup Kumar Saha, explained that foreign‑branch banks can currently set higher FCNR(B) rates because they can borrow in foreign currency more cheaply.
Because PSB lacks a foreign branch, its ability to attract foreign‑currency deposits is capped. The bank has therefore earmarked $25 million in FCNR(B) deposits and an additional $75 million through external commercial borrowing (ECB) and overseas foreign‑currency borrowing (OFCB). These instruments give the bank leverage to channel proceeds from NRIs into FCNR(B) accounts.
The RBI recently eased the ceilings on FCNR(B) rates to spur foreign inflows amid currency pressures, but PSB notes that the new framework still leaves branchless lenders at a disadvantage. "We expect some relaxation so that we can tap that market also," Saha said.
In the June quarter, PSB posted a 23 percent jump in net profit, reaching ₹331 crore. Net interest margin (NIM) closed the quarter at 2.53 percent, while net interest income grew 15 percent. Saha said the downward cycle has hit its bottom and that the bank expects NIM to improve, targeting 2.65 percent for the current fiscal year.
Looking ahead, Saha outlined a long‑term vision that aligns with the government’s Viksit Bharat agenda. PSB’s new mission statement, "Viksit Bharat ka Vishwasiniya Bank," signals a focus on customer‑centric service, trust, transparency, and technology‑driven excellence.
The bank’s mid‑term plan is to lift its total business mix to ₹4 lakh crore by FY29, up from ₹2.66 lakh crore as of 30 June 2026. To support this expansion, PSB aims to open more than 2,000 branches, 1,600 ATMs, and 6,000 business correspondents.
Capital raising is also on the agenda: PSB intends to raise ₹2,000 crore through a qualified institutional placement. The bank is in talks with merchant bankers to gauge market appetite and will proceed when conditions are favorable.
The RBI’s recent rate‑ceiling lift was aimed at encouraging foreign inflows, but PSB’s experience underscores that banks without foreign branches still face constraints under the current regulatory framework. As the bank waits for a definitive decision on FCNR(B) deposit relaxations, its June‑quarter results show solid profitability and a clear path toward a higher NIM.
PSB’s strategic plan to reach ₹4 lakh crore in business mix by FY29 remains on track, with expansion in branches, ATMs, and correspondents underway. The upcoming qualified institutional placement will add to the bank’s capital base. The next earnings report, scheduled for the end of the current fiscal year, will shed further light on the effectiveness of its strategy and the impact of any regulatory changes on its foreign‑currency deposit portfolio.
The bank has already sent a feeler to the RBI and is awaiting a decision that would allow banks without overseas branches to offer rates that rival those available to lenders with foreign outlets. PSB’s chief executive, Swarup Kumar Saha, explained that foreign‑branch banks can currently set higher FCNR(B) rates because they can borrow in foreign currency more cheaply.
Because PSB lacks a foreign branch, its ability to attract foreign‑currency deposits is capped. The bank has therefore earmarked $25 million in FCNR(B) deposits and an additional $75 million through external commercial borrowing (ECB) and overseas foreign‑currency borrowing (OFCB). These instruments give the bank leverage to channel proceeds from NRIs into FCNR(B) accounts.
The RBI recently eased the ceilings on FCNR(B) rates to spur foreign inflows amid currency pressures, but PSB notes that the new framework still leaves branchless lenders at a disadvantage. "We expect some relaxation so that we can tap that market also," Saha said.
In the June quarter, PSB posted a 23 percent jump in net profit, reaching ₹331 crore. Net interest margin (NIM) closed the quarter at 2.53 percent, while net interest income grew 15 percent. Saha said the downward cycle has hit its bottom and that the bank expects NIM to improve, targeting 2.65 percent for the current fiscal year.
Looking ahead, Saha outlined a long‑term vision that aligns with the government’s Viksit Bharat agenda. PSB’s new mission statement, "Viksit Bharat ka Vishwasiniya Bank," signals a focus on customer‑centric service, trust, transparency, and technology‑driven excellence.
The bank’s mid‑term plan is to lift its total business mix to ₹4 lakh crore by FY29, up from ₹2.66 lakh crore as of 30 June 2026. To support this expansion, PSB aims to open more than 2,000 branches, 1,600 ATMs, and 6,000 business correspondents.
Capital raising is also on the agenda: PSB intends to raise ₹2,000 crore through a qualified institutional placement. The bank is in talks with merchant bankers to gauge market appetite and will proceed when conditions are favorable.
The RBI’s recent rate‑ceiling lift was aimed at encouraging foreign inflows, but PSB’s experience underscores that banks without foreign branches still face constraints under the current regulatory framework. As the bank waits for a definitive decision on FCNR(B) deposit relaxations, its June‑quarter results show solid profitability and a clear path toward a higher NIM.
PSB’s strategic plan to reach ₹4 lakh crore in business mix by FY29 remains on track, with expansion in branches, ATMs, and correspondents underway. The upcoming qualified institutional placement will add to the bank’s capital base. The next earnings report, scheduled for the end of the current fiscal year, will shed further light on the effectiveness of its strategy and the impact of any regulatory changes on its foreign‑currency deposit portfolio.
