Mumbai: Banks remain optimistic of a sharp pick-up in foreign currency non-resident (FCNR-B) deposits before the RBI's September 30 deadline for the special scheme, despite initial inflows falling below expectations.Bank executives said they are forging relevant partnerships with overseas entities to help execute the flows, noting that actual activity on the scheme only began at the end of June, after the central bank issued FAQs clarifying all the necessary points.They have also pointed out some issues, including tax treatments in certain jurisdictions that make such investments infeasible, and noted that tapping non-resident Indians in the Middle East, Singapore, and Hong Kong is best suited to the scheme's success.Among public sector lenders, Punjab National Bank has mobilised USD 425 million against its target of USD 2.5 billion, Union Bank of India has garnered USD 106 million against the targeted USD 2 billion, Indian Bank has collected USD 140 million against its USD 2 billion goal, while Central Bank of India has mobilised just USD 8.8 million against a target of USD 400 million.South Indian Bank has set a target of USD 1 billion but has not disclosed the amount mobilised so far.Among lenders that disclosed collections without specifying targets, RBL Bank mobilised USD 150 million and Canara Bank USD 80 million.Several private sector banks, including HDFC Bank, ICICI Bank, Kotak Mahindra Bank, and YES Bank, refrained from disclosing the quantum of FCNR(B) deposits mobilised during their earnings calls, making it difficult to assess the industry's overall progress. It can be recalled that in the recent past, top policymakers have held parleys with bankers, urging them to accelerate the flows under the scheme. To attract foreign funds, the RBI has allowed banks to offer attractive returns on FCNR(B) deposits, including five-year deposits, by suspending the interest rate ceiling on fresh FCNR(B) deposits under the special scheme.Kotak Mahindra Bank managing director and chief executive officer Ashok Vaswani said demand from non-resident Indian (NRI) customers has been strong, though the pace of mobilisation will depend on the bank's ability to arrange leverage through partner institutions."The NRI customer demand is very strong because it's such an attractive opportunity. It's our ability to get the supply side done which is going to make the difference," Vaswani said. Vinay M. Tonse, managing director and chief executive officer of Yes Bank, said inflows are well above its normal market share."Existing limits for the leveraged FCNR offering have been fully utilised and the bank is awaiting higher limits due to industry-wide demand. We have started offering 9x leverage and could review the limit in the coming weeks depending on market demand," Tonse added. Bank executives maintained that mobilisation is likely to pick up closer to the September 30 deadline as overseas depositors typically take investment decisions towards the end of the scheme period and lenders intensify their outreach to non-resident Indians.Asheesh Pandey, MD and CEO of Union Bank of India, expressed confidence that margins can be improved further despite the evolving interest-rate environment. He added that deposits have been garnered from several locations, including Australia and the UAE."Deposits have come from several locations, including Australia and the UAE. We have five dedicated NRI branches and have identified another 20 branches with a large NRI customer base to run a focused mobilisation campaign. We have also set up an NRI cell to contact customers individually instead of relying only on SMS campaigns," he said.However, Sandeep Batra, executive director at ICICI Bank, while affirming support to make the scheme a success, flagged that getting the funds will be dilutive on the net interest margins (NIM), which are already under pressure at the system-level. Earlier, Barclays in its report had said that Foreign currency non-resident (FCNR) deposit inflows are likely to fall short of lofty market expectations despite gaining momentum in the coming weeks. Without spelling out a number, the brokerage noted that while stronger inflows could materialise during the remaining two-and-a-half months of the FCNR scheme, "it will require a relatively high run rate to get to anywhere close to market expectations by the time the window closes at the end of September." Barclays also said comparisons with the 2013 FCNR scheme may be misleading as higher US interest rates have reduced the relative attractiveness of such deposits. HDFC Bank's chief executive and managing director also went public citing experts that the scheme could yield around USD 50-55 billion in infows, lower than the up to USD 70 billion expected by some analysts.