3 weeks ago
HDFC Bank, ICICI Bank raise FCNR(B) deposit rates to 6.25%
Imagine you live in another country but your family is from India — you are called an NRI.
You can keep your savings in a special account called an FCNR(B) deposit, where your money stays in foreign currency like dollars or euros.
The Indian government said it would help pay some extra costs for these deposits until September 2026.
Because banks save money on those costs, they can now pay more interest to customers.
Two big banks, HDFC Bank and ICICI Bank, now offer 6.25% interest for money kept for three to five years.
Most other big Indian banks offer around 6%.
This is nice because your money stays in foreign currency and is protected if the Indian rupee changes value.
Also, eligible NRIs do not have to pay income tax on that interest.
However, experts warn that this is for safe saving, not for getting rich quickly.
HDFC Bank and ICICI Bank raised FCNR(B) deposit interest rates to 6.25% for tenures of three to five years.
The RBI announced in June that the government would bear hedging costs on eligible FCNR(B) deposits until September 30, 2026.
ICICI Bank's higher rate applies to deposits of ₹4 lakh and above for tenures from more than 36 months to 60 months.
HSBC raised the most under the RBI's FCNR(B) swap scheme at $6.14 billion, followed by State Bank of India with $4.12 billion.
FCNR(B) deposits allow NRIs to hold tax-free fixed deposits in foreign currencies while being shielded from rupee fluctuations.
Several other major banks, including SBI, Axis Bank, Kotak Mahindra Bank and Bank of Baroda, are offering around 6.00% on FCNR(B) deposits.
- Who
- HDFC Bank and ICICI Bank, which raised FCNR(B) deposit rates for NRI investors, following a policy decision by the Reserve Bank of India.
- What
- Both banks raised FCNR(B) deposit interest rates to 6.25% for tenures between three and five years.
- Where
- India.
- When
- The rate increases follow the RBI's June announcement; the government's hedging-cost support covers deposits booked until September 30, 2026.
- Why
- The RBI decided that the government would bear the hedging cost on eligible FCNR(B) deposits, lowering banks' funding costs and allowing them to raise rates by 25 basis points.
Key facts
- HDFC Bank FCNR(B) rate
- 6.25% for 3-5 year tenures
- ICICI Bank FCNR(B) rate
- 6.25% on deposits of ₹4 lakh and above for 36-60 month tenures
- Rates at other major banks
- 6.00% at SBI, Axis Bank, Kotak Mahindra Bank, Bank of Baroda, PNB and Canara Bank
- Government hedging-cost support
- Until September 30, 2026, for tenures of three to five years
- Top FCNR(B) swap mobilisation
- HSBC at $6.14 billion, followed by SBI at $4.12 billion and ICICI Bank at $3.70 billion
- Eligible currencies
- US dollar, pound sterling and euro
- ICICI premature withdrawal
- 12-month lock-in; withdrawals after lock-in attract a 1% penalty
- HDFC lock-in
- One-year lock-in for deposits booked June 10 to September 30, 2026
Quotes
Vishal Goraddia
Fund Manager at Aikyam India Discovery Fund
“FCNR(B) deposits should be viewed as part of an investor's fixed‑income allocation rather than a growth investment.”
businesstoday.in
Sources
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