NRI USD Deposits: Are You Earning 5.75% Yet?

After RBI's forex swap move, Indian banks have sharply hiked interest rates on FCNR(B) USD deposits. NRIs can now earn meaningfully better returns by parking their foreign currency in India — with full principal and interest repatriation rights.

Here's what happened: RBI conducted forex swap auctions to manage rupee liquidity, which pushed banks to aggressively raise FCNR(B) deposit rates to attract NRI dollar inflows.. Multiple banks including large private banks and small finance banks have raised USD FCNR(B) rates, with some now offering up to 5.75% per annum on select tenors.. FCNR(B) deposits are held in foreign currency, so NRIs face zero exchange rate risk on principal — they get back exactly what they put in, in USD..

What you should do: Compare FCNR(B) USD rates across at least 4–5 banks (private, PSU, and small finance banks) before locking in — rate differences of 0.50–1% are common right now.. Check if your chosen tenor (1 year, 2 years, or 3 years) qualifies for the highest rate slab, since banks often offer peak rates only on specific durations.. Confirm with your bank whether the FCNR(B) account allows premature withdrawal and what the penalty is — lock-in terms vary significantly between banks..

FCNR(B) interest income is completely tax-free in India for NRIs — no TDS, no income tax filing needed here — making the effective yield even better than it looks on paper.