FCNR Rate Boost: Earn ₹1L More on NRI Deposits?

The Indian government is now covering hedging costs for FCNR(B) deposits, letting banks offer NRIs much higher interest rates on 3-to-5-year foreign currency deposits until September 2026.

Here's what happened: The Indian government will absorb hedging costs on fresh 3-to-5-year FCNR(B) deposits made until September 30, 2026, making them more attractive to NRIs and OCIs.. Because banks no longer bear the full currency hedging expense, they can pass higher interest rates on to depositors — potentially earning NRIs around $1,277 extra on a $10,000 five-year deposit.. FCNR(B) accounts let NRIs park foreign currency (USD, GBP, EUR, etc.) in Indian banks at fixed rates, with both principal and interest fully repatriable and tax-free in India..

What you should do: Compare FCNR(B) rates across SBI, HDFC Bank, ICICI Bank, and axis-bank" class="text-primary font-semibold hover:underline">Axis Bank right now — rates vary significantly and some banks will update offers faster than others.. Check the deposit tenor carefully — the government subsidy only applies to fresh 3-to-5-year deposits opened before September 30, 2026, so act before the window closes.. Consult a tax advisor in your country of residence — while FCNR interest is tax-free in India, your host country may still tax this income depending on the tax treaty..

FCNR(B) deposits are exempt from Indian TDS entirely — unlike NRE fixed deposits, there is zero tax deducted at source, making repatriation of full maturity proceeds hassle-free.