FCNR(B) Rates Jump: Is Your NRI Deposit Earning Enough?

After RBI's forex swap move, Indian banks have sharply raised interest rates on FCNR(B) dollar deposits. If you are an NRI parking dollars in India, this rate jump could mean meaningfully higher returns — but there are things to compare before you move money.

Here's what happened: RBI conducted forex swap auctions to boost dollar liquidity, prompting banks to compete harder for NRI foreign currency deposits.. Banks including HDFC Bank, PNB, AU Small Finance Bank and Karur Vysya Bank have raised FCNR(B) USD deposit rates noticeably in recent weeks.. FCNR(B) deposits let NRIs park foreign currency in India without conversion risk — principal and interest are fully repatriable in the same currency..

What you should do: Compare current FCNR(B) USD rates across at least 3-4 banks before locking in — small finance banks often offer higher rates than large private banks right now.. Check the tenor carefully: FCNR(B) deposits run from 1 to 5 years, and the best rates are typically on 2-3 year tenors, not the shortest term.. Confirm the bank's DICGC insurance cover applies to your FCNR deposit and ask whether premature withdrawal penalties apply if rates fall later..

FCNR(B) interest is completely tax-free in India for NRIs — unlike NRE fixed deposits, you also avoid currency conversion risk since both deposit and payout stay in dollars.