FCNR(B) Deposits: Are You Earning 8% on Dollars?

Indian banks are aggressively raising foreign currency deposits from NRIs. If you or a family member earns in dollars, pounds, or euros, FCNR(B) accounts can lock in high interest rates and protect your savings from rupee swings — completely tax-free in India.

Here's what happened: Indian banks including public sector lenders are tapping the RBI's concessional FCNR(B) swap window to raise $1.5–2 billion in fresh foreign currency deposits from NRIs.. The RBI periodically offers banks a cheaper cost to hedge FCNR(B) deposits, which incentivises banks to offer NRIs higher interest rates — currently ranging from 6% to 8% depending on currency and tenure.. FCNR(B) deposits are held in foreign currency (USD, GBP, EUR, CAD, AUD, JPY), so the principal and interest are fully protected from rupee depreciation — a big deal when the rupee has slipped over 5% in recent years..

What you should do: If you have a family member abroad, ask them to compare FCNR(B) rates across SBI, Union Bank, Bank of Baroda, and HDFC Bank right now — rates vary by up to 1.5% between banks.. Check whether your NRI relative qualifies: any Non-Resident Indian or Person of Indian Origin (PIO) can open an FCNR(B) account with a minimum tenure of 1 year and maximum of 5 years.. Confirm the tax angle before investing: interest earned on FCNR(B) deposits is fully exempt from Indian income tax for as long as the account holder maintains NRI status — no TDS deducted..

Pro tip: When the RBI activates its concessional swap window, banks briefly offer above-market FCNR(B) rates to attract deposits. These windows close fast — NRI account holders should lock in longer tenures (3–5 years) during these periods to secure the higher rate for the full term.