A limited-time opportunity for Non-Resident Indians (NRIs) and Overseas Citizens of India (OCIs) to earn elevated interest rates on Foreign Currency Non-Resident (Bank) [FCNR(B)] deposits is rapidly approaching its end. With the Reserve Bank of India's (RBI) special forex swap facility for these deposits concluding on August 31, 2026, banks have been offering highly competitive rates, with some reaching as high as 6.75% on US dollar deposits.
High Rates Driven by RBI Support
The attractive interest rates on 3-5 year FCNR(B) deposits stem from a strategic move by the RBI in June. The central bank announced that the government would absorb the hedging costs associated with these deposits, mobilised under a special USD-INR forex swap facility. This measure significantly reduced the financial burden on banks, encouraging them to provide more appealing rates for longer-tenure foreign currency deposits.
Originally slated to remain open until September 30, the RBI expedited the closure of the FCNR(B) window to August 31 following a robust influx of US dollar deposits.
Leading Banks and Their Offerings
As of August 17, 2026, according to BankBazaar's analysis of advertised rates, two private sector banks are at the forefront:
- IDFC FIRST Bank: Offering 6.75% on US dollar FCNR(B) deposits for 3-5 year tenures (below $1 million).
- IndusInd Bank: Also offering 6.75% on US dollar FCNR(B) deposits for 3-5 year tenures (below $1 million).
Public sector banks are also presenting strong rates:
- Central Bank of India: 6.60%
- Punjab National Bank (PNB): 6.60%
- Bank of Baroda: 6.50%
- Canara Bank: 6.50%
- UCO Bank: 6.50%
Other major private banks, including ICICI Bank, HDFC Bank, and Axis Bank, are offering a maximum rate of 6.25% on comparable US dollar deposits.
Significant Inflows Mobilized
The RBI's special USD-INR forex swap facility has been highly successful in attracting foreign currency inflows. Data reported up to August 21, 2026, reveals that the facility mobilised a total of $72.848 billion. FCNR(B) deposits alone accounted for a substantial $65.397 billion, representing nearly 90% of the total inflows. The remaining contributions came from Overseas Foreign Currency Borrowings (OFCBs) at $4.860 billion and External Commercial Borrowings (ECBs) at $2.591 billion.
What Happens After August 31?
While the immediate disappearance of these high rates after August 31 is not guaranteed, the cessation of the RBI's hedging cost support will likely diminish banks' incentive to maintain such elevated rates on new 3-5 year FCNR(B) deposits. Investors are advised to consider the August 31 deadline as a critical window to lock in these favourable terms.
Benefits of FCNR(B) Deposits
FCNR(B) accounts allow eligible non-residents to hold deposits in various foreign currencies, including US dollars, euros, British pounds, and Japanese yen. A key advantage for investors is that the interest earned on these deposits is generally tax-exempt in India. Furthermore, FCNR(B) deposits provide protection against Indian Rupee exchange rate fluctuations for the foreign currency invested, offering stability and predictability to non-resident investors.
Prospective investors should verify the latest applicable rates and terms directly with their chosen bank, as rates can vary based on currency, tenure, and deposit size.