SBI, HDFC Bank, ICICI Bank: Banking stocks rally, NIFTY BANK index up over 400 pts; key points to know

Shares of banking stocks were trading with notable gains in the early trade on Thursday, September 3, following the update that India attracted a whopping $127.23 billion in Foreign Currency Non-Resident (FCNR-B) deposits under the Reserve Bank's special USD-INR forex swap facility till August 31, the closing date.

The closing date was advanced by a month following a robust response from the Indian diaspora.

At 09:22 AM, the NIFTY Bank index traded 0.71% higher at 57,577.15 levels. The index hit a high of 57,661.40 during the early session. HDFC Bank was up 0.69%m while ICICI Bank shares were up 1.28%.

State Bank of India (SBI) shares were trading 1.16% higher at ₹1,032.70 apiece on the NSE.

Axis Bank, Canara Bank, and Union Bank were also trading over 1% higher.

• The NIFTY PRIVATE Bank index was trading 1.18% higher at 27,931.95 levels. RBL Bank was the top gainer, up 3.62%. Other leading gainers were HDFC Bank, ICICI Bank, Axis Bank, and IndusInd Bank.

• The NIFTY PSU Bank index was trading 1.17% higher at 8,611.70, with all 12 constituents trading in the green.

Bank of Maharashtra gained the most, up over 4%.

Details to know

The RBI's special USD-INR forex swap facility for FCNR (B) deposits, Overseas Foreign Currency Borrowings (OFCB) and External Commercial Borrowings (ECBs) was launched on June 8, 2026.

The facility was announced as part of the RBI's efforts to strengthen India's external sector position and support foreign exchange liquidity amid global market uncertainties.

The measures have led to a surge in foreign exchange inflows into the country, with total inflows of $136.377 billion as of August 31, according to the RBI data.

Foreign Currency Non-Resident (Bank), or FCNR(B), deposits alone accounted for $127.226 billion (provisional), underscoring the overwhelming response of Non-Resident Indians to the scheme, the RBI said.

What investors need to know

The massive FCNR(B) mobilisation is broadly positive for banks as it strengthens foreign-currency funding and adds rupee liquidity to the banking system, potentially supporting credit growth and easing funding conditions.

However, reports note that the development should not be viewed as an immediate boost to bank profitability or NIMs, as banks incur interest costs on these deposits and the RBI may absorb part of the surplus liquidity.

Investors will therefore track how lenders deploy the additional funds and whether it translates into stronger loan growth.

How are large FCNR(B) inflows positive for the economy?

Large FCNR(B) inflows mean more foreign money is coming into India’s banking system.

When banks receive these dollars and exchange them with the RBI for rupees, it increases the amount of money available in the financial system.

This gives banks more liquidity — essentially, more funds that can potentially be used to lend to businesses and individuals.

This can support credit growth and economic activity. When banks have enough money to lend, companies can borrow to expand factories, invest in new projects, or increase production, while consumers can access loans for homes, cars, and other spending.

In simple terms, more liquidity can make it easier for money to flow through the economy, supporting investment, consumption and growth.