Global Fintech Fest 2026: IDFC FIRST Bank CEO V. Vaidyanathan Sees Profitability Improving on $3.6B FCNR(B) Deposits

IDFC FIRST Bank has successfully mobilized $3.6 billion (approximately ₹30,000 crore) in Foreign Currency Non-Resident (Bank) deposits under the Reserve Bank of India’s (RBI) concessional swap window, MD and CEO V. Vaidyanathan stated in an exclusive conversation with CNBC-TV18 at the Global Fintech Fest (GFF) 2026 in Mumbai.

The massive foreign currency inflow now accounts for nearly 11 percent of IDFC FIRST Bank’s total deposit base, marking one of the most successful balance sheet optimizations among private sector lenders capitalizing on the central bank's currency swap mechanism. Across the banking system, Indian lenders have mobilized roughly $127 billion under this window.

The 55 bps Cost-of-Funds Arbitrage

Addressing questions on how this substantial influx impacts the bank’s funding profile, Vaidyanathan explained that the foreign currency deposits offer a significant cost advantage over traditional domestic retail and bulk term deposits.

"We raised money at about 5.60% to 5.65% in dollars. When you account for the Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) requirements, the fully loaded cost to the bank comes to approximately 6.75%," Vaidyanathan said.

In contrast, prevailing domestic term deposits in India are commanding interest rates between 7.20% and 7.30% or higher. The FCNR(B) deposits therefore provide IDFC FIRST Bank with an immediate ~55 basis point margin arbitrage, substantially reducing its blended cost of incremental liabilities.

Retiring High-Cost Wholesale Liabilities

Crucially, the bank does not intend to let this influx sit idle or trigger aggressive price competition on the lending front. Instead, IDFC FIRST Bank will systematically use the ₹30,000 crore inflow as a substitution tool to pay off high-cost domestic wholesale and certificate of deposit (CD) borrowings as they mature.