FCNR Deposits: Govt Covers Hedging — NRIs Earn 6%?

The Indian government is now covering hedging costs on new 3-5 year FCNR deposits. Banks like SBI, HDFC, ICICI, and others have updated their rates, with some offering up to 6%. This makes FCNR accounts more attractive for NRIs sending money to India.

Here's what happened: Several major Indian banks including SBI, HDFC Bank, ICICI Bank, PNB, and Central Bank of India have revised their FCNR(B) deposit interest rates upward.. The Indian government announced it will absorb hedging costs on new 3-to-5-year FCNR(B) deposits, significantly reducing the currency risk for NRI depositors.. Central Bank of India is among the banks offering up to 6% on FCNR(B) deposits — one of the highest rates available on foreign currency deposits in India right now..

What you should do: Compare: If you have family abroad, ask them to compare FCNR rates across SBI, HDFC Bank, ICICI Bank, and Central Bank of India before opening a new deposit.. Check eligibility: FCNR(B) deposits are open to NRIs and PIOs — confirm your NRI family member's residency status qualifies before applying.. Evaluate tenure: Focus on the 3-to-5-year bracket since that is the specific window where the government is covering hedging costs, maximising your real returns..

FCNR deposits are held in foreign currency (USD, GBP, EUR, etc.), so the principal and interest are both repatriable and not exposed to rupee depreciation — a double shield most NRI investors overlook.