Private banks in India outperformed peers in the first quarter of the 2027 financial year due to robust deposit growth [1].

This performance is critical as it demonstrates the resilience of private lenders amid fluctuating foreign currency inflows and evolving regulatory environments in the Indian banking sector.

Santanu Chakrabarti of BNP Paribas said the Reserve Bank of India's FCNR(B) scheme is a positive development for most banks [1]. The scheme is expected to support foreign-currency inflows and further strengthen deposit growth, which has already underpinned the recent outperformance of private banks [1].

However, recent data indicates significant volatility in these inflows. Net FCNR(B) inflows fell to $900 million in FY26 [2]. This represents an 87% decline from the $7.1 billion recorded in FY25 [2].

Despite the plunge in FY26 figures, the growth in Current Account Savings Account (CASA) deposits during Q1FY27 provided a necessary buffer for private institutions [1]. The ability of these banks to maintain strong CASA growth allows them to manage liquidity more effectively while they attempt to attract more NRI deposits through adjusted rates [2].

Financial analysts said that the interplay between domestic deposit growth and foreign currency schemes will determine the stability of the sector throughout the remainder of the fiscal year [1].

“Private banks in India outperformed peers in the first quarter of the 2027 financial year.”

The contrast between the sharp decline in FY26 foreign currency inflows and the strong Q1FY27 performance suggests that Indian private banks are successfully pivoting toward domestic deposit growth to offset external volatility. While the FCNR(B) scheme remains a strategic tool for attracting foreign capital, the current reliance on CASA growth indicates a shift toward more stable, internal liquidity sources to maintain competitive advantages.