Managing Director & CEO, Bank of Baroda
Expecting $4-5 Billion Inflows Through Bonds, Borrowings And FCNR(B) Deposits: Bank Of Baroda
The RBI's decision to bear the entire hedging costs of the foreign currency non -resident (FCNR) deposits has had a positive impact on banking stocks, with Bank of Baroda being one of the best performers.
In conversation with Latha Venkatesh, Bank of Baroda MD & CEO, Debadatta Chand says:
-Current rates remain attractive for overseas investors
We are comfortable with the rates being offered
-RBI's swap facility should also enhance rupee liquidity for banks
-Expecting $4-5 Billion inflows through bonds, borrowings and FCNR(B) deposits
-Dollar liquidity is expected to improve
Listen in.
#rbi...
About Debadatta Chand
On July 20, 2026, Dr. Debadatta Chand addressed Bank of Baroda's 119th Foundation Day celebration, which was held under the theme "Leading with Trust." He stated that the bank should continue to "justify that trust through every decision we make, every customer we serve, every innovation we introduce, every promise we keep," and called for the bank to "innovate with responsibility, serve with humility, and lead the trust with one purpose, one team, one goal, one bank, striving for a billion dreams." The event included a tribute to the bank's founder, Maharaja Sir Sayajirao Gaekwad III, and the launch of an initiative with global brand ambassador Sachin Tendulkar. In a June 9, 2026 interview, Chand said he expected inflows of "upward of 4 to 5 billion" dollars through bonds, borrowings, and FCNR(B) deposits, attributing the anticipated flows to recent Reserve Bank of India measures. He stated that the bank's guidance for net interest margins remained in the 2.75 to 2.95 percent range and that he did not see "any elevated stress" in the bank's loan book compared to the previous quarter. Chand noted that the June quarter was likely to show better treasury income than the March quarter, though he added that the final outcome would depend on the June closing.
Transcript (33 segments)
L
Latha0:08
Welcome to an important economy segment. The Reserve Bank agreeing to pick up the entire hedging cost of banks when they raise FCNR or foreign currency non-resident deposits has had a positive impact on banking stocks. Among the best performing stocks was Bank of Baroda. It rose over 5% on the day after these announcements came from Reserve Bank. And Bank Nifty in general has been an outperformer for the past 2 weeks. To understand how the sector and the economy will get impacted by the various Reserve Bank of India and government measures, I have with me the managing director and CEO of Bank of Baroda himself, Mr. Debadatta Chand. Mr. Chand, thank you very much indeed for your time. Well, first up let me start with this FCNR deposits. Do you expect a substantial flow for your bank in particular? You have a lot of international branches. Do you see a substantial flow for you and for the sector?
D
Debadatta Chand1:10
Thanks, Latha, again. I think it is going to be there as far as the flows are concerned. And there are two measures that are very calibrated in terms of the announcement we have from the Reserve Bank of India. And it's going to improve the dollar liquidity within the system within the economy. At the same time, also because of the swap rule, the rupee liquidity with the banks. So, we had a similar past also measures significantly brought in significant inflow to India at that point of time. So, going by that, I think this measure is going to significantly bring the flows back into India. And what we estimate as a system as a whole is that roughly around 40 to 50 billion would be the amount of money that can come to India through all the routes. At the same time, Bank of Baroda has been one of the significant players last time also. I think we are also looking at something around maybe in upward of 4 to 5 billion in terms of flows which can be in the form of bond borrowing and FCNR B deposit. So, I think because of our franchisee across the world, I think we are better positioned to bring the flows. And the measures of the Reserve Bank of India is something that really gives us comfort to bring flows and utilize this money in a productive manner.
L
Latha2:23
Okay, you are expecting 4 to 5 billion for yourself. I mean, for your from your own branches, is it?
D
Debadatta Chand2:29
That's right, yeah.
L
Latha2:30
What about the OFCB route? Overseas foreign currency borrowings. There the Reserve Bank is promising to pick up 1.5% of the swap. Does that make it attractive?
D
Debadatta Chand2:45
It is actually if you look at in terms of dollar liquidity outside India for a bank like us to borrow. I think there are very fine rates at this point of time. So, the current swap cost is almost 3% and RBI is going to have 1.5%. So, it gives a significant opportunity for us to slightly elevate our borrowing cost on the OFCB route. Not only us, but many of the players. So, that I think the market is going to be attractive if in case you offer 1.25% higher than the current borrowing rate. So, that's also a significant and there again, the players would be a wholesale player and where significant flows can come into India. And I think that's going to be very significant and we are comfortable at the current rate offered wherein the borrowing can happen with the swap cost of 1.5%.
L
Latha3:34
Okay. So, should I understand that even you will be looking at the OFCB route?
D
Debadatta Chand3:41
Yeah, I mean, it can be all players. I mean, we also have large borrowing we keep doing borrowing outside.
L
Latha3:45
I agree. That is exactly what I was coming to. You know, when it comes to certificates of deposits, you are a big player in the wholesale market as well. I'm looking at some numbers. I hope they are right. They're picked up by AI. They say that Bank of Baroda raised 1.94 lakh crore via certificates of deposits through calendar 2025 and is also a very large fundraiser in 2026. So, will that come down? I'm wondering if you're having the OFCB route, will this be less in the current year?
D
Debadatta Chand4:19
It would be because see, as I said, it's not only initially I said that the dollar liquidity within the system or within the economy, but also rupee liquidity at the hand of the bank because of these measures. So, obviously when we can raise rupee liquidity through the swap route, obviously the dependency on many of these instruments that you are referring would come down. That is one. Secondly, as far as the certificate of deposit of Bank of Baroda is concerned, look, these are again short-term deposits. So, it keep on rolling it over during the entire year and entire year it becomes an amount which is again you are referring to. So, we as a bank typically manage resources in a manner where the bulk deposit which typically of one year tenor and the certificate of deposit which is slightly shorter terms in terms of 3 to 6 months, so that we can optimize on the cost side of it. So, that's a part of the normal resource budgeting resource planning.
L
Latha5:08
Got it.
D
Debadatta Chand5:08
And obviously this is going to have a lower dependency on this instrument.
L
Latha5:12
Okay. Now, the reason why I brought up the CD route itself is the CD market and the CP market best indicated the happiness of the interest rate market over these announcements. CD rates have fallen by about 30-40 basis points and so have commercial paper rates as well, corporate bonds as well. So, can we assume that at least for the next two quarters, like this and the next quarter, cost of funds of banks will fall?
D
Debadatta Chand5:43
It would all depend upon still we have one month to go for this quarter. I mean slightly for the earlier months, obviously on the wholesale market I'm not talking about the retail market on the wholesale market which consisting of bulk deposit and CD, things are slightly elevated earlier. And these measures immediately pulled down the market and I think on a going basis we have to watch out for the June quarter how it goes. But obviously these measures are going to be positive impact with regard to the cost of deposit, particularly the instrument of bulk and the CD are referring.
L
Latha6:15
Okay. No, I was just wondering directionally can your margins be at the higher level of your range or even have an upside bias?
D
Debadatta Chand6:28
We'll see we have given the guidance after our annual results for March and we'll just see in June then we'll just see how it goes then.
L
Latha6:36
Okay.
D
Debadatta Chand6:37
But on the liquidity side and the consequent cost impact it was still elevated in the earlier 2 months. So this month going to be better in case you look at these measures and the consequent impact therein. So for the 3 months together for the quarter we have to see the numbers the time we announce those numbers.
L
Latha6:53
That's it. No, I agree with you. Even if you start today you only have half a month of this entire quarter left. So it cannot perhaps move the needle much but over the 6 months you know you give 2.75 to 2.95 as your range guidance. I was just wondering if you can be ambitious enough for 3%. No?
D
Debadatta Chand7:13
We factored in multiple factors while giving this guidance and we still hold on to the guidance.
L
Latha7:18
Okay. Those were the positive questions. Now the stress. You are also a big lender in the Middle East and in African countries. Would you worry that slippages can rise? There was an upward tinge in your fourth quarter slightly in MSMEs. They must be people exposed to trade. Would you worry that stress levels can go up a bit?
D
Debadatta Chand7:43
As of today, if you look at the geopolitical and consequent impact on the market, particularly retail, corporate and international I mean the quality of books are as it is. So, there is no change in terms of stress level. MSME because of the ECLGS is going to have a substantial boost in terms of both credit pickup and even if there is some inherent stress because of the geopolitical I mean the impact therein. So, as a whole, I don't think as on today any elevated stress vis-à-vis what we had in March. Things are very very low. And the factors which normally we monitor on the stress, whether it is a collection efficiency or a stress level in terms of SMA 01 and things are well within control and well be well below our guidance that we had given on all these factors.
L
Latha8:28
Okay. Oh, that's very good to hear. In fact, those were going to be my questions. How are SMA loans doing? And you're not seeing any increase in SMA 0 or 1.
D
Debadatta Chand8:38
Yeah.
L
Latha8:38
Okay. Well, let me come to loan growth. The banking sector looks like will have easier liquidity than you all expected when you all were giving us your guidance. So, can you expect a better than guided credit growth? Your credit growth was strong. I mean, I'm not taking away from it. I think north of 14%. So, do you think you will do even better in the current year because funding is somewhat better?
D
Debadatta Chand9:07
Look, the March fully we had a global credit growth of 16.25%. the domestic was 14.5%, but the global was 16.25. So, a scenario we had given a guidance of 13 to I mean, 13 to 15% up-sizing from the earlier 12 to 14%. So, as on today, if I look into the overall impact of the geopolitical or the growth that is happening on the Indian market, I think the market is still very resilient. The economy is resilient. There are demands on both in the retail also in MSME. ECLGS is going to give a boost in terms of MSME growth. In that scenario, we still hold to the guidance of 13 to 15%. Which was off-sized by 1% this is the previous year guidance. Whereas the actual was much higher than the guidance we had given for the previous year. In that way, I'm quite positive in terms of a whole year impact if you look at the growth that we are targeting on the advanced side would be in the range of 13 to 15%.
L
Latha10:05
Okay. Just one question on the ECL. You kept some extra provisions. I think 1400 crore of extra provisions you did keep. Now you are 2 months in. You know what the ECL transition is all about. What kind of impact can it have? Can it have impact on provisioning? Can it have impact on even ROA?
D
Debadatta Chand10:23
So there are two things I said while announcing the December one that the impact both on the CRAR is something we anticipated that and it is within that I mean whatever the impact we had anticipated earlier. In terms of credit cost in terms of extra provisioning, I mean you have my March number. The guidance of the credit loss including the ECL impact would be within that. But we again said in the March when we announced the full financial year numbers that something we are just waiting for the final calculation for June. because now earlier it was an estimate. Now we have to really compute that. So we need to wait till June end to figure out what is the exact impact on the bank's book. But my sense as on today whatever we said earlier I mean the numbers are going to be within that only.
L
Latha11:34
Okay, I think you said 18 bips impact on credit cost. I think that was your guidance. You think it will be within that. Finally, do you think this time you may be on the positive side in treasury income? You know, the treasury yields have fallen closer to 6.9 now the 10-year G sec compared to what 7.1 etc. earlier in this quarter. Likewise, as I said CP CD yields everywhere have fallen. Likely this quarter treasury gains?
D
Debadatta Chand12:05
I won't say treasury gain, but the change is very positive as always what we have seen in March. So whether it is a depreciation provided the likely depreciation will be lower definitely as compared to what we provided for March. Similarly, the treasury income in terms of trading profit is going to be higher because of the change market in this quarter as compared to the last quarter. But whether you are going back to the September kind of a number, that's not the current scenario. We have to just see the main issue here is a geopolitical which is impacting different markets and the different liquidity rate. So with a baseline like assuming slightly early resolution of that can typically put us into a very good position. But as on today, I will say that June quarter is going to be better than the March in terms of treasury income. But how much positive will just see because we'll have to wait for the June closing also. But it is definitely as on today if I look at the transition in terms of treasury income, it is better than that of March.
L
Latha13:02
Okay. Okay. That's good to hear. Mr. Chand, it was a pleasure speaking with you. Thank you for giving us the first inside of you on how the banking sector might react and how it may be advantaged because of the better flow of funds that we are all expecting from FCNR and the overseas borrowing. Thank you very much indeed for joining us.
D
Debadatta Chand13:22
Thank you Latha. Thanks for inviting. Thank you.
L
Latha13:24
Well, that's it on this edition of It's the Economy and bizarre after break time for chart busters.