FCNR Rates Cut: What Your NRI Family Earns Now?

Major Indian banks have cut FCNR(B) deposit interest rates from September 2026 after a government hedging support scheme ended. If your NRI family parks foreign currency in Indian banks, returns will be lower now.

Here's what happened: Multiple major banks including HDFC Bank, ICICI Bank, SBI, and Kotak Bank cut FCNR(B) deposit rates from September 1, 2026.. A government-backed hedging support scheme for FCNR deposits expired on August 31, 2026, removing a cost subsidy banks had relied on to offer higher rates.. Without the subsidy, banks must fund their own currency hedging costs, leading to rate reductions passed directly to NRI depositors..

What you should do: Compare current FCNR(B) rates across at least 3-4 banks before your NRI family member opens or renews a deposit — the spread between lenders can be 0.25-0.5% right now.. Check whether NRE fixed deposits (rupee-denominated, tax-free for NRIs) offer better post-tax returns than FCNR at current rates — they often do when hedging costs are high.. If the FCNR deposit is already locked in, note the maturity date — do NOT auto-renew at the default rate; instruct your bank to notify you so you can renegotiate or switch..

FCNR deposits are fully repatriable and principal is protected in the original currency. But interest earned by the NRI abroad may be taxable in their country of residence — check with a tax advisor in their country before depositing large amounts.