Banks Chasing NRI Funds: Is Your FCNR Rate Better?

Indian banks are racing to attract NRI deposits using a special RBI window. This could mean better interest rates on FCNR accounts — good news if you or your family abroad want to park foreign currency in India safely.

Here's what happened: RBI has opened a concessional swap window letting banks raise foreign currency deposits (FCNR-B) at lower hedging costs, making it attractive for banks to offer higher rates to NRI depositors.. Public sector banks including Union Bank are targeting $1.5–2 billion in fresh FCNR-B deposits, signalling aggressive rate competition in this segment over the coming months.. FCNR-B deposits allow NRIs to park money in foreign currency (USD, GBP, EUR, etc.) for 1–5 years, earning fixed interest with full principal and interest repatriation guaranteed..

What you should do: Compare FCNR-B rates across SBI, Union Bank, HDFC Bank, and ICICI Bank right now — rates can differ by 0.5–1% for the same tenure.. If you have a family member abroad, ask them to lock in an FCNR-B deposit for 3–5 years before this concessional RBI window closes and banks pull back higher rates.. Check whether an NRE fixed deposit suits you better — NRE FDs are rupee-denominated, also tax-free in India, and currently offering 7–7.5% from several banks..

FCNR-B interest is completely tax-free in India for the NRI depositor, and there is zero currency risk since both principal and interest are returned in the original foreign currency.