State Bank of India Chairman Challa Sreenivasulu Setty indicated that the liquidity generated from FCNR(B) deposits will take three to four months to be deployed, despite a current surplus in the banking system.

IN · 2026-09-10

1. Step 1 · The triggerFCNR(B) deposit inflows add to the Indian banking system's liquidity surplus, leaving banks with excess funds relative to immediate lending opportunities.
2. Step 2 · Knock-onBanks, including SBI, Axis Bank, IDFC FIRST Bank, and Bank of Baroda, hold these surplus funds in low-yielding placements, compressing net interest margins until deployment.
3. Step 3 · Knock-onOver the next 3–4 months, as banks deploy this liquidity into new loans, credit availability for Indian SMEs and corporates improves, easing access and potentially softening lending terms.
4. Step 4 · Reaches youIndian SMEs seeking new loans or refinancing benefit from increased competition among banks to lend, improving their negotiating position on rates and terms.

The trigger is reported by the source below. The steps that follow are Branch²’s traced reasoning — how the shock could reach a business like yours, not a prediction.

Source: The Hindu BusinessLine

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