New Delhi, Sept. 4 -- Foreign currency non-resident (FCNR-B) deposits are likely to improve banks' return on equity (RoE) despite a marginal pressure on net interest margins (NIM), as exemptions from reserve requirements and the ability to lend against pledged deposits make the funding more capital-efficient, according to a report by Anand Rathi Research.

The brokerage said the FCNR-B scheme has received a strong response since its launch on June 8, with USD 127.3 billion mobilised through FCNR-B deposits and total foreign currency inflows reaching USD 136.4 billion when overseas foreign currency borrowings (OFCBs) and external commercial borrowings (ECBs) are included.

While the market has viewed FCNR-B deposits as potentially NIM-dilu...