Axis Bank chief warns excess FCNR(B) inflows could trigger risky lending
Axis Bank MD & CEO Amitabh Chaudhry said the surge of FCNR(B) deposits may push banks to lend unusually fast, and hinted a rate rise is likely soon.
Speaking at the Global Fintech Fest 2026, Axis Bank MD & CEO Amitabh Chaudhry cautioned that the massive inflow of foreign currency non-resident deposits through the RBI's concessional swap window has far exceeded market expectations, swelling system liquidity to nearly ₹10.5 trillion. He warned that banks might resort to "abnormal lending" to deploy the excess funds, despite already high corporate credit growth. Chaudhry highlighted the narrow gap between U.S. and Indian rates and geopolitical tensions in the Gulf as factors that could pressure the rupee and prompt a rate hike, possibly in October or December.
He also called for larger banks, suggesting mergers as a path forward. Additionally, he clarified that recent workforce reductions at major banks stem from earlier technology investments rather than AI displacement.
