<p><a href="https://www.mid-day.com/business/business-news/article/canara-bank-q2fy27-profit-rises-8-per-cent-to-rs-5175-crore-23655045" target="_blank" rel="none noopener">State-run Canara Bank </a>expects its margins to improve led by a strong retail lending during the festive season, according to news agency PTI.</p>
<p>"With the festive season expected to boost consumption, we anticipate strong growth in retail lending, supported by higher consumer spending. This should also help improve our margins," Canara Bank Managing Director and CEO Brajesh Kumar Singh told PTI.</p>
<h2>NIM outlook</h2>
<p>He expects the lender's net interest margin (NIM) to be in the range between 2.5 per cent and 2.6 per cent considering the repo rate hike.&nbsp;</p>
<p>The Reserve Bank of India (RBI) earlier this month had <a href="https://www.mid-day.com/business/business-news/article/rbi-mpc-rbi-hikes-repo-rate-to-55-per-cent-rules-out-rate-cuts-in-near-term-23653790" target="_blank" rel="none noopener">hiked its repo rate by 25 basis points to 5.5 per cent,</a> which is expected to boost the margins.&nbsp;</p>
<p>According to the investor presentation, the bank's NIM stood at 2.55 during the September quarter from 2.50 in the corresponding quarter in the previous year. NIM is a key financial metric to understand a bank's profitability.</p>
<p>Around 53 per cent of the bank's loan book is repo rate-linked, which has seen an increase following the RBI's rate revision, according to PTI.</p>
<h2>Canbank Factors sale to be completed by FY27</h2>
<p>Singh further said the sale of the public sector bank's subsidiary, Canbank Factors, is expected to conclude during the current financial year.&nbsp;</p>
<p>"We expect the transaction to be completed either by the end of the third quarter or during the fourth quarter, subject to regulatory approval," he said.</p>
<p>The bank's board of directors had decided to sell unlisted subsidiary Canbank Factors to Vidvedaa Private for Rs 80.5 crore, in August. The board has approved the sale of the bank's 70 per cent stake through the transfer of 100 per cent of the company's equity shares.</p>
<h2>Cost of fund</h2>
<p>Singh said to reduce the cost of funds, he said, the bank has replaced a portion of its high-cost bulk deposits with Foreign Currency Non-Resident (FCNR) deposits.</p>
<p>Canara Bank had mobilised USD 5.8 billion from <a href="https://www.mid-day.com/business/business-news/article/india-may-receive-fcnr-b-deposits-up-to-usd-85-billion-sbi-report-23641803" target="_blank" rel="none noopener">FCNR(B) deposits</a> till August 31, during the concessional forex swap window, and the lender has utilised most of the the funds, he said.</p>
<h2>Why did RBI launch FCNR swap window?</h2>
<p>The RBI had launched the concessional FCNR swap window on June 8, 2026 as part of broader steps to encourage capital inflows to boost India's balance of payments during global uncertainty. Under this facility, banks could mobilise new FCNR-B deposits and exchange the dollars with the RBI at a lower, concessional rate.</p>
<p>The government and RBI announced these measures to boost inflows as the West Asia crisis created significant challenges for the Indian economy. The rising oil prices and foreign portfolio investor outflows led to concerns over external stability given India is the third largest consumer and importer of crude oil.</p>
<h2>What is FCNR (B)?</h2>
<p>Foreign Currency Non-Resident (Bank) or FCNR (B) deposits is a fixed-term deposit account that allows non-resident Indians (NRIs), persons of Indian origin, or overseas citizens of India to maintain a fixed deposit in specified foreign currencies. The RBI permits these deposits to encourage foreign currency inflows that helps to safeguard the rupee against depreciation and to strengthen India's foreign exchange reserves.</p>
<p><em><strong>(With inputs from PTI)</strong></em></p>

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