FCNR Rates Slashed: Is Your NRI Deposit Earning Less?

HDFC Bank, ICICI Bank, SBI, PNB, and axis-bank" class="text-primary font-semibold hover:underline">Axis Bank have cut interest rates on FCNR (B) deposits — mainly 3-to-5-year tenures — after RBI eased hedging cost rules for banks. NRIs holding or planning these deposits will now earn less.

Here's what happened: Five major banks — HDFC Bank, ICICI Bank, SBI, PNB, and Axis Bank — have cut FCNR (B) deposit interest rates, with the steepest reductions on 3-to-5-year tenures.. The rate cuts follow RBI's decision to ease hedging cost requirements for banks on FCNR (B) deposits, which reduced banks' overall cost of accepting these foreign-currency funds.. FCNR (B) deposits allow NRIs to park money in India in foreign currencies like USD or GBP; the interest is now lower on fresh deposits or renewals at these banks..

What you should do: Compare current FCNR (B) rates across all major banks before renewing — smaller banks and co-operative banks may still offer 0.25–0.50% higher rates on the same tenure.. Check your existing FCNR deposit certificate — if already locked in, your contracted rate is protected until maturity, so no immediate action is needed.. Ask your NRI family member to consider staggering maturities (laddering) across 1-year, 3-year, and 5-year tenures so that not all deposits renew in a low-rate environment simultaneously..

FCNR (B) deposits are exempt from Indian income tax on interest — but locking in now at a lower rate for 5 years could cost more in foregone earnings than the tax saving is worth. Run the numbers before committing.