HDFC Bank FCNR(B) 2026: Nomura flags ₹950 target

Why FCNR(B) 2026 is back in focus

Nomura said on Monday that the RBI’s FCNR(B) 2026 scheme could be a “single window” opportunity that improves HDFC Bank’s near-term balance sheet setup. The brokerage argued that the stock’s risk-reward has turned favourable as it trades at decade-low multiples, and reiterated a Buy call with a target price of ₹950. The key idea is that foreign currency deposits, if mobilised at scale through the FCNR(B) route, can support funding without triggering a domestic deposit-rate fight.

The renewed attention comes as markets are tracking policy signals around liquidity and foreign inflows. Banking stocks broadly gained on expectations of improved system liquidity and foreign deposits. But HDFC Bank shares stayed largely flat even as the Bank Nifty rose 2%, reflecting that stock-specific issues, including governance questions, remain relevant for investors.

Nomura’s thesis: deposits, funding mix, and the CD gap

Nomura noted that the “ask” on deposit growth is among the highest for HDFC Bank versus large private peers. Over the last 12 months, the bank has been one of the most active participants in the certificate of deposit (CD) market to bridge the gap between credit and deposit growth.

The brokerage’s base case is that FCNR(B) can help address “key balance sheet overhangs faster than the market expects” if the bank captures the opportunity. Nomura’s estimate is that HDFC Bank could garner 15% of overall FCNR flows, which it equated to about 3% of the bank’s current deposit base.

What changes if FCNR(B) flows come through

Nomura outlined three potential mechanical benefits if FCNR(B) deposits scale up.

First, it said pro-forma deposit growth could re-rate from 15% to 18% in FY27, with the incremental growth coming through the NRI channel and “without a domestic rate war.” Second, loan growth, which Nomura flagged as being at risk of moderating, could improve to 15%, while keeping the liquidity coverage ratio (LCR) comfortable at 115%.

Third, the brokerage highlighted a funding mix benefit: long-tenor NRI deposits could substitute short-tenor CD funding. If that happens, the elevated reliance on wholesale money that characterised the past year may reduce, which Nomura said could ease the risk of further downward pressure on net interest margins (NIMs).

Market moves and a rate action: MCLR up to 10 bps

Even as broader bank stocks gained on the RBI’s new concessional forex swap facility aimed at boosting foreign inflows, HDFC Bank’s stock reaction was muted. The same session also saw HDFC Bank raise MCLR lending rates by up to 10 basis points across key tenors after the RBI kept policy rates unchanged amid concerns around energy prices and geopolitical tensions.

The combination of potential foreign inflows and stable policy rates is typically supportive for banks’ funding and liquidity. But for HDFC Bank, investor positioning has also been shaped by the ongoing governance narrative, which limited near-term upside participation in the rally.

Governance overhang: what is known from the updates

Brokerage commentary referenced steps taken to stabilise leadership and address concerns. The management team’s assurance, Keki Mistry’s appointment as interim chairman, and the RBI’s endorsement of the bank’s corporate governance and compliance standards helped assuage some concerns, according to the cited note.

Separately, Motilal Oswal’s report noted that Mr. Atanu Chakraborty resigned as part-time chairman on 18 Mar 2026 due to “certain happenings and practices” not aligned with his values, while the RBI and the bank denied governance issues. The same set of updates flagged that the appointment of a new chairman and the submission of Mr. Sashi Jagdishan’s name for the next CEO term (term due in Oct 2026) could help restore investor trust.

Financial snapshot: Q3FY26 numbers cited by Motilal Oswal

Motilal Oswal’s research note cited 3QFY26 profit of INR 186.54 billion, up 11% YoY and in line with estimates. Net interest income (NII) grew 6.4% YoY to INR 326.2 billion, while margins on total assets increased 8 bps QoQ to 3.35%.

Other income stood at INR 132.5 billion (up 16% YoY), led by treasury gains of INR 9.3 billion (vs INR 0.7 billion in 3QFY25). The bank reported an INR 8.0 billion impact from transition to the new labour code. Provisions were INR 28.4 billion, with the note adding that the bank released INR 10.4 billion of contingent provisions related to a large borrower group.

Loans, deposits, and ratios: operating indicators highlighted

Another set of figures cited in the material pointed to steady balance sheet momentum. Gross advances rose 3.1% QoQ and 8.9% YoY. After adjusting for interbank participatory certificate (IBPC) sales, net loans grew 4.4% QoQ and 9.9% YoY.

On liabilities, total deposits increased 1.4% QoQ and 12.1% YoY. CASA deposits rose 1.3% QoQ and 7.4% YoY, while term deposits grew 1.4% QoQ and 14.6% YoY. The CASA ratio was stable at 33.9%, and the loan-to-deposit ratio improved by about 285 bps QoQ to 99%.

Broker targets and valuation markers now in play

Nomura’s views appeared in multiple contexts in the provided material. Alongside the ₹950 target referenced with the FCNR(B) thesis, the text also cited that Nomura reaffirmed a Buy rating and revised its target price to ₹1,095 from ₹2,190 after the bank’s 1:1 bonus issue on Aug 27, 2025. In that frame, the bank’s core operations were valued at 2.3 times projected book value per share for June 2027, with subsidiaries contributing ₹120 per share.

Motilal Oswal maintained its earnings estimates and expected RoA/RoE of 1.9%/14.5% by FY27E in more than one excerpt. It cited a Buy with a target price of ₹1,100 in one instance and reiterated Buy with a TP of ₹1,175 (also referenced as a report dated January 18, 2026) in another.

Regulation backdrop: ECL transition from April 2027

The RBI’s draft guidelines on the Expected Credit Loss (ECL) framework were described as a watershed for Indian banking regulation. As stated, scheduled commercial banks would transition to model-based provisioning from April 2027, with a phased glide path through FY2032.

The same material also cited revised credit risk capital norms, including lower risk weights for affordable housing (20% to 40%) and rated MSMEs (down to 85%), while commercial real estate risk weights were cited at 150%. These changes, as described, aim to improve risk differentiation and reinforce prudence in segments experiencing rapid credit growth.

What investors will track next

From the set of broker notes and updates provided, three near-term markers stand out. One, whether the RBI’s FCNR(B)-linked window and forex swap facility translate into measurable foreign inflows for banks and whether HDFC Bank is able to capture a meaningful share.

Two, the sequencing of governance actions, including the appointment of a new chairman and the process around Sashi Jagdishan’s next CEO term (due Oct 2026). Three, operating performance: Motilal Oswal flagged that improved operating performance in the coming year would be critical to stock performance, even as the interim leadership and swift regulatory engagement provide comfort on continuity.

Conclusion

Nomura’s FCNR(B) 2026 thesis frames foreign currency deposits as a potential lever for HDFC Bank to improve its funding mix, lift deposit growth, and keep liquidity metrics comfortable without escalating domestic deposit rates. Alongside that, Motilal Oswal’s estimates and targets keep attention on profitability recovery by FY27E and on the governance timeline through Oct 2026. The next set of signals for the stock will likely come from clarity on leadership appointments and evidence of execution on deposit mobilisation and balance sheet metrics.