State Bank of India (SBI) Chairman Challa Sreenivasulu Setty has shared important news about the money currently sitting with banks. Speaking at the Global Fintech Fest 2026, he mentioned that it will take three to four months to fully use the extra money generated from Foreign Currency Non-Resident (Bank) or FCNR(B) deposits. FCNR(B) refers to fixed deposits kept by NRIs in foreign currencies like Dollars or Pounds which are then converted to Rupees for use in India.

As of September 8, 2026, the Indian banking system is sitting on a massive surplus of about ₹10.50 lakh crore. This is a very large amount of extra cash that banks have not yet lent out to customers. Mr. Setty believes that banks will be responsible and careful in how they deploy this money, rather than rushing to lend it all in a single month.

SBI, the country's largest bank, is leading this trend. As of June 30, the bank already had excess money invested in Statutory Liquidity Ratio (SLR) securities worth ₹3.06 lakh crore. SLR is the minimum percentage of deposits that a bank must keep in the form of gold or government bonds. Now, thanks to the new foreign currency inflows, SBI’s excess SLR has jumped even higher to ₹4 lakh crore.

While there is a lot of extra cash, the demand for loans also looks very promising. SBI Managing Director Ashwini Kumar Tewari noted that the bank’s loan pipeline is very strong. If you count loans that are approved but not yet paid out, unused credit limits, and new applications, the total reaches over ₹9 lakh crore. This means there is high demand from big companies for corporate credit.

The current extra money in the system came because of a special move by the RBI. Between June and August, banks collected $127.23 billion in foreign deposits under a special swap window. Banks gave these Dollars to the RBI and received Rupees in return. This created a lot of Rupee liquidity (cash availability) in the banking market.

For bank officers, the challenge now is finding the right place to lend this money. Madan Sabnavis, Chief Economist at Bank of Baroda, pointed out that banks paid a high interest rate of 6.00% to 6.50% to get these foreign deposits. To make a profit, banks must lend this money at even higher rates rather than just keeping it parked with the RBI.

Currently, banks are parking their extra funds with the RBI at a rate of 5.24%. This is considered a temporary solution because the interest earned is lower than the cost of the deposits. Bankers should watch out for the next few months as big tax payments like GST and advance tax will take some money out of the system, helping the RBI decide if further action is needed to manage the cash flow.