Archive · 3 Sep 2026
Major Indian Banks Cut FCNR Deposit Rates After Subsidy Ends
Some Indian banks offer fixed deposits in foreign currencies to people living outside India.
These accounts are called FCNR (B) deposits.
The government temporarily helped banks pay the cost of protecting against currency changes.
This allowed banks to offer unusually high interest rates, sometimes above 6%.
Many depositors brought in more U.S. dollars than expected.
Because the inflows were so large, the government ended the support on August 31, 2026, earlier than planned.
The banks then lowered their rates starting September 1.
The new rates are mostly around 3%, but the exact amount depends on the bank, deposit period, and deposit size.
FCNR accounts also provide tax-free interest, repatriation of funds, and protection against exchange-rate changes.
HDFC Bank, ICICI Bank, SBI, PNB, Axis Bank, and Kotak Mahindra Bank cut FCNR (B) deposit rates from September 1, 2026.
The reductions followed the early end of government support for hedging costs on three- to five-year FCNR (B) deposits.
The support, initially scheduled through September 30, ended on August 31 after stronger-than-expected dollar inflows.
RBI data cited in the reports showed $127.2 billion through the special concessional swap window and $136.3 billion including ECB and OFCB inflows.
Revised rates generally range from 2.95% to 3.50%, compared with earlier peak rates of 6% to 6.50%.
- Who
- HDFC Bank, ICICI Bank, State Bank of India, Punjab National Bank, Axis Bank, and Kotak Mahindra Bank, along with the Government of India and the Reserve Bank of India.
- What
- The banks reduced interest rates on three- to five-year FCNR (B) deposits after special government hedging-cost support ended.
- When
- The revised rates took effect on September 1, 2026, after the support ended on August 31, 2026.
- Where
- The changes apply to FCNR (B) deposits offered by banks in India.
- Why
- The government ended the support early after stronger-than-expected dollar inflows through the special deposit scheme and related borrowing routes.
- Affected deposits
- FCNR (B) foreign-currency fixed deposits with three- to five-year maturities.
- Eligible depositors
- Non-resident Indians, overseas citizens of India, and persons of Indian origin.
- Support timeline
- Government hedging-cost support was initially scheduled through September 30, 2026, but ended on August 31.
- Earlier peak rates
- The banks had offered peak rates ranging from 6% to 6.50% on some supported deposits.
- Reported inflows
- RBI provisional data cited in the reports showed $127.2 billion through the special concessional swap window and $136.3 billion including ECB and OFCB inflows.
- HDFC Bank revised rates
- 3.50% for three to four years and 3.15% for four to five years.
- Lowest and highest listed new rates
- The listed revised rates range from 2.95% to 3.50%, depending on the bank, tenure, and deposit amount.
