NRI Dollar Deposits: Are You Earning 5.5% Yet?

Several Indian banks have sharply raised interest rates on FCNR(B) dollar deposits for NRIs following an RBI move in the forex market. If you park dollars in India now, you could earn much better returns than before.

Here's what happened: Multiple Indian banks including large private and small finance banks have hiked FCNR(B) USD deposit rates to attract more foreign currency from NRIs abroad.. The rate hike follows an RBI forex swap operation that made it cheaper for banks to offer higher returns on foreign currency deposits without taking on extra currency risk.. FCNR(B) deposits allow NRIs to hold money in foreign currencies like USD at Indian banks — principal and interest are fully repatriable and tax-free in India..

What you should do: Compare FCNR(B) USD rates across at least 4-5 banks — HDFC Bank, PNB, and smaller banks like AU Small Finance Bank are currently competitive.. Check the tenure sweet spot: FCNR(B) rates vary significantly by tenure (1-5 years), so calculate which term gives you the best effective return before locking in.. Consult a tax advisor in your country of residence — while FCNR(B) interest is tax-free in India, it may be taxable in your country of residence depending on tax treaties..

FCNR(B) deposits are insured under DICGC up to ₹5 lakh equivalent — for large dollar amounts, spread deposits across banks to maximise deposit insurance coverage.