The Reserve Bank of India (RBI) recently concluded its special FCNR(B) (Foreign Currency Non-Resident (Bank)) deposit scheme ahead of schedule, with the facility closing on August 31, 2026. This early closure comes in response to overwhelming demand from Non-Resident Indians (NRIs), who poured an impressive $133 billion into the scheme since its launch in June.
Designed to attract foreign currency inflows, the special window allowed Indian commercial banks to offer NRIs attractive interest rates, ranging from 5.5% to 7%, on dollar-denominated FCNR(B) deposits. A key incentive was the RBI's decision to absorb the associated hedging costs, making these deposits particularly appealing. The significant mobilization underscores a growing appetite among overseas Indians for banking products in their home country, with overall NRI deposits increasing 43% to $13.33 billion in 2024.
Digital Transformation Crucial for Long-Term Relationships
While the FCNR(B) scheme successfully drew substantial funds, industry experts emphasize that attracting deposits is merely the first step. Banks now face the challenge of converting this surge of interest into enduring customer relationships. Prasad Patil, CTO & Chief - Business Operations at Mobicule Technologies, highlighted the importance of operational efficiency beyond just competitive rates.
“Rate alone doesn't decide this,” Patil stated, pointing to the critical role of the onboarding experience. Research from Fenergo cited by Patil indicates a concerning trend: 70% of financial institutions lost clients in 2025 due to slow onboarding processes, a significant jump from 48% in 2023. This issue is particularly pronounced for NRI customers, who frequently initiate account openings remotely, making delays in identity verification, document validation, and crucial Know Your Customer (KYC) and Anti-Money Laundering (AML) checks highly detrimental.
Leveraging AI for Seamless Onboarding and Compliance
To address these operational bottlenecks, banks are increasingly turning to digital solutions. Patil noted a substantial increase in AI adoption for KYC and AML processes across the industry, rising from 42% in 2024 to 82% in 2025. While much of this adoption remains partial, its impact is clear.
Digital KYC, automated document verification, and workflow orchestration are proving instrumental in processing larger volumes of applications while maintaining stringent compliance controls. Automated verification can reduce processing time by approximately 78% compared to manual review, with some institutions cutting KYC/AML review times by up to 60%. These efficiencies are vital for banks aiming to retain the customers acquired during the FCNR(B) window and deepen these relationships into broader, long-term NRI banking partnerships.
The successful closure of the FCNR(B) scheme, driven by robust NRI demand, has not only boosted India's banking system but also sharply brought into focus the indispensable role of advanced digital onboarding and compliance systems in the evolving landscape of international finance.