Foreign-currency non-resident (FCNR(B)) deposits could prove beneficial for banks’ return on equity (RoE) despite being mildly dilutive to net interest margins (NIM), according to a report by Anand Rathi Share and Stock Brokers.
The report, titled “The dollar-deposit opportunity: Why bank investors should watch RoE, not just NIM”, said the market’s focus on potential NIM dilution overlooks the balance-sheet, capital-efficiency and duration benefits of the scheme.
