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Informist, Friday, Jul. 10, 2026

NEW DELHI/MUMBAI – Bank of Maharashtra expects to raise sizeable foreign currency non-resident deposits by Sept. 30, Managing Director and Chief Executive Officer Nidhu Saxena said Friday, without specifying a number that the bank would target. The state-owned lender is working on internal guidelines for attracting these deposits and potentially leveraging them, with a nominal number already being raised, he said in a press meeting after the bank's June quarter earnings.

Last month, the RBI opened a concessional swap window for banks to park funds raised from their 3-5 year FCNR deposits at no hedging cost, with the scheme in effect till Sept. 30. Earlier on Friday, Indian Bank's management said it would target raising $1.5 billion under the scheme. Saxena expects traction to build up in the next few weeks. The bank is speaking to foreign lenders and has increased diaspora outreach to boost deposits from the scheme.

The bank also conducted dozens of meetings with foreign investors for its offshore fundraising with board approval of $500 million in place. The plan initially was to use the fundraising for credit growth rather than leverage for FCNR(B) deposits, Saxena said. He noted that several other public sector banks had also delayed fundraising throuh external commercial borrowing due to higher cost of funds in the offshore market currently. Foreign currency bonds maturing in over three years raised until Sept. 30 also have a concessional hedging rate of 1.5% provided by the RBI. 

The lender's integrated banking unit at Gujarat International Finance Tec-City, its first international branch, was a key driver for Bank of Maharashtra's push into these products, Saxena said. It had also turned profitable ahead of its one-year schedule. After beginning operations in September 2025, the branch posted a profit of nearly $3 million in 2025-26 (Apr-Mar) and had already sanctioned loans worth $965 million by the end of June, on pace for the portfolio to be at the $1-billion target in a year of operations.

In the June quarter, Bank of Maharashtra's net interest margin fell to 3.85% from 3.91% a quarter ago, but remained above the management's guidance of 3.75%. The bank had been focusing on profitability through various measures taken in recent quarters and was increasing the emphasis by providing tools at the branch level to monitor and maintain profitability, Saxena said. He maintained the guidance of 3.75% for FY27. The bank also sees fee income and other non-interest income rising in the current financial year with the increased use of its credit cards in force.

Saxena also said the bank would aim for its current-account-savings account deposits of around 50% of its total book, from 48.5% as on Jun. 30. The low-cost deposits fell on an absolute basis sequentially after being at 53% of the book at the end of March. While the banking sector's low-cost deposit ratio had shrunk by 8-9 percentage points over the past year due to consumer preferences, the Pune-based lender had shown an annual decline of only around 4%, the bank's chief said. Some of the current-account-savings-account deposits also turned into term deposits but maintaining low cost deposits is a key priority for the bank and is being pushed through its mobile banking app. 

"So people have clearly moved to different asset classes," Saxena said, highlighting data showing India's savings rate shrinking over the past two decades. "So with this new fresh development, we have to mend our ways to look at addressing the changed situations and how we can keep offering differentiated options, differentiated propositions and attract fresh business, attract more clients to us."

Conscious of maintaining its high margin, the bank had foregone issuing certificates of deposit in the June quarter and was funding credit offtake entirely using deposit growth, the MD said. The bank's advances were up 26.9% on year at INR 3.06 trillion, while deposits rose 12.9% on year to INR 3.44 trillion as on Jun. 30. 

The jump in credit was helped by the government's Emergency Credit Line Guarantee Scheme 5.0 scheme, through which the bank sanctioned around INR 35 billion of loans. Around INR 31 billion of these loans were to micro, small and medium-enterprises, with the rest to corporate clients, the management said. In May, the Union Cabinet approved the scheme to extend credit support to Indian businesses amid uncertainties related to the war in West Asia and the government had guaranteed INR 1.55 trillion of loans until Tuesday. While April saw some slowdown in activity due to the geopolitical situation, Saxena said most branches reported credit activity as "business as usual" in May and June. 

"...(in) some way, this also takes care of any temporary liquidity mismatch or any stresses building out of the West Asia," the MD said. "It's a zero risk weight advance. So it benefits me in several ways."

So far, the presence of the El Nino weather phenomenon and lower-than-average rainfall had not led to any increase in stressed assets in agricultural loans, Saxena said. The southwest monsoon was in a deficit of nearly 40% in June, before recovering in July. In Maharashtra, the bank's core area of operation, excess rainfall in July had brought the overall picture into normal, though the bank was continuously monitoring the situation, according to Saxena.

Meanwhile, the management did not shed further light on the bank's fundraising plans but the MD said that all approvals were in place to raise INR 50 billion through equity and INR 25 billion through debt in FY27, barring the government's go-ahead. The Centre holds 73.60% stake in Bank of Maharashtra. Saxena said equity shareholders should not be displeased with a fresh issuance as the bank had delivered over 24% return on equity in the June quarter, against the guidance of 20%. 

During market hours Friday, Bank of Maharashtra reported a net profit of INR 20.20 billion for the June quarter, up 27% on year. Total income grew 15% on year to INR 90.63 billion in the reporting quarter. The state-owned lender's shares ended 2.7% higher at INR 84.25 on the National Stock Exchange.  End

US$1 = INR 95.33

Reported by Aaryan Khanna and Nandini Sinha

Edited by Avishek Dutta

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