HDFC Bank, Bandhan Bank, PNB, SBI: Lenders Hike FCNR Deposit Rates, Offer Up To 7.1% To NRI Depositors

Non-Resident Indians (NRIs) looking to park their overseas savings in India are getting higher returns as several banks have revised their Foreign Currency Non-Resident (Bank) [FCNR(B)] deposit rates following the Reserve Bank of India’s (RBI) recent policy support aimed at attracting foreign currency inflows.

Private sector lender Bandhan Bank has emerged among the top rate providers, offering up to 7.1 per cent on US dollar-denominated FCNR(B) deposits. The move comes after the RBI introduced a special USD-Rupee forex swap facility for banks on fresh FCNR(B) deposits with maturities ranging from three to five years.

An FCNR (B) deposit is a term deposit account meant for Non-Resident Indians (NRIs) to park overseas earnings in foreign currencies

in India.

Bandhan Bank Offers Highest Rates Among Major Lenders

Bandhan Bank has increased its FCNR(B) deposit rate to 7.1 per cent for US dollar deposits of $1 million and above with tenures between three and five years. For deposits below $1 million, the bank is offering 7 per cent.

The bank said the revised rates allow NRIs to lock in attractive returns for a longer period while reducing exposure to currency fluctuations, especially in case of rupee depreciation.

PNB, South Indian Bank Also Revise Rates

State-owned Punjab National Bank (PNB) has raised FCNR(B) deposit rates across currencies. For deposits below $1 million, PNB is offering up to 6.5 per cent on US dollar and pound sterling deposits. Euro-denominated deposits can earn up to 4.95 per cent, while Canadian dollar and Australian dollar deposits offer up to 4.9 per cent and 5.5 per cent, respectively.

For deposits of $1 million and above, rates increase to 6.6 per cent for US dollar and pound sterling deposits, 5.05 per cent for euro deposits, 5 per cent for Canadian dollar deposits and 5.6 per cent for Australian dollar deposits.

Meanwhile, South Indian Bank has revised its FCNR(B) deposit rate on US dollar deposits to 6.5 per cent for maturities between three and five years.

Smaller Banks Offer Better Returns

Several smaller private-sector and small finance banks are offering rates that are higher than those available at larger lenders.

AU Small Finance Bank is offering up to 7.1 per cent on five-year FCNR(B) deposits, matching Bandhan Bank’s peak rate.

CSB Bank has increased rates on deposits with maturities of three years to less than four years by 290 basis points to 6.95 per cent.

Yes Bank is offering up to 6.6 per cent on five-year FCNR(B) deposits, while Equitas Small Finance Bank has also revised its FCNR(B) deposit rates for NRI customers following the RBI’s announcement.

How Large Banks Compare

Among India’s largest lenders, FCNR(B) deposit rates remain relatively lower. State Bank of India, HDFC Bank, ICICI Bank and Axis Bank currently offer rates of up to around 6 per cent on FCNR(B) deposits with maturities between three and five years.

State-owned Bank of Baroda recently raised FCNR(B) deposit rates by up to 50 basis points, offering a peak rate of 6.25 per cent on five-year deposits.

Why Banks Are Raising FCNR Deposit Rates

The RBI recently announced a USD-Rupee forex swap facility for banks on fresh FCNR(B) deposits mobilised for a minimum tenure of three years and up to five years. Under this mechanism, banks can swap eligible FCNR(B) USD deposits with the RBI, allowing them to mobilise stable foreign currency deposits while effectively mitigating currency risk.

Following the announcement, several banks have increased FCNR(B) deposit rates to attract NRI deposits, particularly in US dollars.

The bank noted that the RBI scheme applies to eligible FCNR(B) deposits accepted up to September 30, with the corresponding swap facility remaining operational until October 16.

Moreover, the Reserve Bank on June 17 also temporarily withdrew interest rate ceiling on fresh Foreign Currency Non-Resident (Bank) deposits of 3-5 years’ maturity till September 30, a move aimed at attracting foreign capital. It has also temporarily withdrawn restriction on interest rates on Non-Resident External (NRE) deposits of 3 years and above tenors, including deposits that are renewed upon maturity, till September 30, 2026.

What It Means For NRIs

The recent rate hikes have made FCNR(B) deposits more attractive for NRIs seeking stable returns in foreign currency without taking direct exposure to rupee fluctuations. With some banks now offering rates above 7 per cent on US dollar deposits, NRIs have an opportunity to lock in higher yields for three to five years while benefiting from the RBI’s efforts to boost foreign currency inflows into India.