# Private Banks' Margins Drop as FCNR Deposits Raise Costs

> Private banks' net interest margins fall as FCNR (B) deposits increase funding costs.
- Title: Private Banks' Margins Drop as FCNR Deposits Raise Costs
- Summary: Private banks' net interest margins fall as FCNR (B) deposits increase funding costs. Private banks saw year-on-year net interest margin drops due to FCNR…
- Keywords: private banks, fcnr deposits, net interest margins, icici bank, hdfc bank, axis bank, nims, Private, Banks', Margins, Drop, FCNR
- Source: The Economic Times — https://economictimes.indiatimes.com/industry/banking/finance/banking/private-banks-margins-fall-as-fcnr-deposits-raise-funding-costs/articleshow/135034870.cms
- Author: Joel Rebello
- Published: 2026-10-18T19:37:00+00:00
- Read time: 1 min
- Topics: private banks, fcnr deposits, net interest margins, icici bank, hdfc bank, axis bank, nims
## Private banks' margins fall
Large private sector banks saw year-on-year drop in net interest margins as FCNR (B) deposits raised funding costs.
## ICICI Bank's margin impact
ICICI Bank's net interest margins dropped 12 basis points to 4.18% from 4.30% a year ago due to FCNR (B) deposits.
## HDFC Bank's margin impact
HDFC Bank's net interest margins fell to 3.16% from 3.27% a year ago after collecting $11.5 billion in FCNR (B) deposits.
## Axis Bank's margin impact
Axis Bank saw net interest margins drop 34 basis points to 3.46% from 3.80% a year ago after collecting $10.62 billion in FCNR (B) deposits.
## Analysts explain impact
Analysts say FCNR (B) deposits increased funding costs and lowered margins due to high leverage and low returns abroad.
## What happens next
HDFC Bank expects continued pressure on net interest margins as FCNR (B) deposits' full impact unfolds.
## Key takeaway

Private banks saw year-on-year net interest margin drops due to FCNR (B) deposits, with ICICI, HDFC, and Axis Bank affected.