RBI’s NRE and FCNR Rate Window: What NRIs Can Earn Before September 30
By C. Thiruvenkatam | Daily Hind News | 22 June 2026
Since June 17, Indian banks have been free to offer whatever rate they want on NRI fixed deposits of three years and above. Several have moved quickly. Bandhan Bank is paying 7.1% per annum on USD deposits above $1 million held as FCNR(B) accounts. CSB Bank is at 7.05% on five-year USD deposits. These are foreign-currency deposits – dollars in, dollars out – with no rupee risk, no tax in India, and full freedom to repatriate every rupee of interest and principal.
The window closes September 30.
The Reserve Bank of India’s decision to temporarily lift rate caps on select NRI deposits is the most significant development in NRI banking this year. Understanding what it actually covers – and what it does not – matters before any decision is made.
1. What the RBI changed on June 17
The Reserve Bank issued amendment directions on June 17, 2026. Two rate caps were lifted, both temporarily.
On FCNR(B) deposits: Banks were previously required to cap interest at the overnight alternative reference rate for the relevant currency plus 350 basis points on the 3-to-5-year bracket. That ceiling is gone until September 30, 2026. Banks can now offer whatever the market and competition drive them to offer.
On NRE fixed deposits: Banks were required to keep NRE deposit rates at or below comparable domestic rupee term deposit rates. That restriction is withdrawn for maturities of three years and above, also until September 30.
Both relaxations apply to fresh deposits and to existing deposits renewed upon maturity during this window.
One exclusion that catches many NRIs off guard: transfers from NRO accounts to NRE accounts do not qualify for the NRE rate exemption. If you are planning to move NRO funds into an NRE deposit to capture these rates, that route is not covered by the June 17 directions.
2. NRE and FCNR(B): the difference that matters for this decision
Both are fully repatriable. Both earn interest that is completely tax-free in India. There the similarity ends.
NRE fixed deposits are held in Indian rupees. You send dollars or pounds from abroad, they convert to rupees at today’s exchange rate, and the deposit earns interest in rupees. When you repatriate at maturity, the bank converts back to your foreign currency at whatever the exchange rate is then. If the rupee weakens over three years, you receive fewer dollars back. If it strengthens, you receive more. The currency risk is entirely yours.
FCNR(B) deposits are held in your foreign currency – USD, GBP, EUR, CAD, AUD, SGD, or JPY. You put in $50,000, the deposit earns interest in dollars, and you receive dollars at maturity. No conversion, no exchange rate exposure, no rupee risk at any point.
For an NRI in the US, UK, or Canada whose savings and expenses are in foreign currency, FCNR(B) is the cleaner choice. You know exactly what you will receive at maturity regardless of what the rupee does. The rates being offered right now are in the same foreign currency you live and work in.
A full comparison of NRE, NRO, and FCNR account structures is in our existing guide: NRE vs NRO vs FCNR Account
3. What banks are offering right now
The table below covers USD FCNR(B) rates for the 3-to-5-year window as of the week of June 22, 2026. Rates for GBP, EUR, CAD, and AUD follow different pricing – check the specific rate cards for your currency.
| Bank | Tenor | USD rate | Notes |
|---|---|---|---|
| Bandhan Bank | 3 to 5 years | 7.1% (above $1M); 7.0% (below $1M) | Highest among major banks |
| CSB Bank | 3 to 4 years | 6.95% | Raised by 290 bps after RBI announcement |
| CSB Bank | 4 to 5 years | 7.00% | |
| CSB Bank | 5 years | 7.05% | |
| Yes Bank | 5 years | 6.60% | |
| Yes Bank | 3 to 4 years | 6.50% to 6.55% | |
| AU Small Finance Bank | 3 to less than 4 years | 7.10% | Confirm current rate before booking |
| HDFC Bank | 3 to 5 years | [Editor: confirm current USD rate at hdfc.bank.in/nri] | Lock-in applies from June 10; special window |
| SBI | NRE FD 3 years and above | [Editor: confirm current NRE FD rate at sbi.co.in/nri] |
A few things this table cannot tell you: rates change without notice. Banks are not obligated to hold any of these numbers to September 30. If you are making a decision based on a specific rate, verify the bank’s published rate card on the day you intend to book – not the rate you saw in an article the previous week.
Minimum deposit sizes also vary. Bandhan Bank’s 7.1% applies above $1 million; below that threshold the rate is 7.0%. HDFC Bank sets minimum deposit requirements by currency – check their NRI banking page for the current minimums.
4. The catches to know before booking
The one-year lock-in on the special window deposits
Both IDFC First Bank and HDFC Bank have confirmed explicitly in their published terms that FCNR(B) deposits booked under the special window (3-5 years) carry a mandatory lock-in of one year. If you break the deposit before completing one year, you receive no interest. None.
This is standard practice for Indian bank FDs when broken very early, but NRIs unfamiliar with local banking norms may not expect it. If there is any chance you will need the money within 12 months, this product is not for you.
After the one-year lock-in, premature withdrawal is generally permitted, though at a reduced rate. IDFC First Bank’s terms also specify that these deposits are not eligible for auto-renewal upon maturity – you would need to actively re-book at whatever rate is available then.
The NRO-to-NRE exclusion
As noted in Section 1, the RBI’s directions explicitly exclude transfers from NRO accounts to NRE accounts from the NRE rate exemption. This matters to NRIs who have built up NRO balances from Indian rental income, dividends, or bank interest, and are now hoping to shift that money into a high-rate NRE deposit.
Moving NRO money to NRE is possible but requires paying applicable taxes first, completing Form 15CA and Form 15CB (certified by a CA), and staying within the USD 1 million annual repatriation limit. After doing all that, the resulting NRE deposit will earn rates that are not covered by the June 17 exemption – it is governed by normal NRE rate rules. Plan accordingly.
Rates are not guaranteed until the deposit is booked
The window closes September 30, but the rates available on September 29 may be different from today’s rates. Banks set and revise FCNR rates based on their own funding needs, global interest rate movements, and competitive pressure. A bank that is offering 7.0% today may have scaled back to 6.5% by August once it has raised enough foreign currency deposits to meet its targets.
US taxpayers: report to the IRS
Interest on FCNR(B) deposits is tax-free in India. The United States taxes worldwide income. If you are a US citizen or tax resident, you must report this interest to the IRS under your annual return and may also have FBAR and FATCA disclosure obligations if the deposit balance exceeds certain thresholds. The Indian tax exemption does not eliminate US tax liability. Consult a tax advisor who handles cross-border India-US taxation before booking.
5. Who this window makes sense for
It fits an NRI who has foreign currency savings that will not be needed for three years, is already comfortable with Indian banking (or willing to get comfortable), and wants to earn materially more than current fixed-income alternatives abroad – without taking currency risk.
A three-year USD deposit at 7.0% in an Indian bank, fully repatriable and tax-free in India, compares favourably to US Treasury yields or typical US bank savings rates right now.
It fits less well for anyone who might need the money within a year (the lock-in makes this a real risk), anyone with US tax complexity that makes the return less attractive on a net basis, and anyone expecting significant rupee appreciation in the next three years who would prefer an NRE deposit to benefit from that movement rather than locking into foreign currency rates.
NRIs with maturing FCNR(B) deposits are the most naturally positioned group. If a deposit you placed in 2023 or 2024 matures before September 30, renewing it during this window qualifies for the relaxed rates.
6. Why the RBI did this – and what it signals
The numbers behind the decision are stark. FCNR(B) net inflows collapsed 87% in FY26 – from $7.1 billion in FY25 to $900 million. Outstanding balances under the scheme stood at just $946 million. With global interest rates elevated, India simply was not competitive enough to attract NRI deposits at the capped rates.
Goldman Sachs estimates the combined effect of the RBI’s June measures could bring in $30-50 billion of foreign currency inflows during calendar year 2026, with most expected to arrive between July and September.
The RBI has used the same tool twice before, both times during periods of external stress. In 2013, following the taper tantrum and rupee weakness, it mobilised approximately $25 billion through a similar FCNR(B) scheme. In 2022, a version of the same measure was used during the post-pandemic dollar surge.
What this tells you as an NRI is simple: the RBI considers this important enough to use its most effective NRI deposit tool. The September 30 deadline is real. There is no indication of an extension.
7. How to open or add to these deposits
If you already have an NRE or FCNR account with a bank offering attractive rates:
Log in to your NRI net banking portal and navigate to the fixed deposit or FCNR section. Most major banks now allow deposit booking digitally. For HDFC Bank, existing customers with an NRE account can transfer to the FCNR account through net banking. New NRI customers who want HDFC rates can write to fcnrswap@hdfc.bank.in with name, mobile number, email, country, and a preferred time to be contacted.
If you need to open a new NRE or FCNR account:
Most major banks have online NRI account opening. You will need a passport copy, visa or residency proof, overseas address proof, and PAN (or Form 60 if PAN is not available). Processing typically takes 3-7 working days. Given that the window closes September 30, starting the account opening process now is advisable if you are interested.
Transferring funds:
Wire the foreign currency directly from your overseas bank account to your new FCNR account, or transfer from your existing NRE account. Use the correct purpose code for a capital deposit into an NRI account – your bank’s NRI desk can confirm the right code for your jurisdiction.
The deposit is booked at the rate applicable on the date the funds are received by the bank, not the date of wire initiation. This matters if rates change during the transfer window.
Frequently asked questions
Can I split a large amount across multiple banks to get above-market rates at each? Yes. There is no restriction on holding FCNR(B) deposits at multiple banks. Some NRIs diversify specifically to manage the DICGC insurance limit (Rs 5 lakh per depositor per bank) and to hedge against any single bank’s rate changes.
My FCNR deposit matures in August. Should I renew it now or wait? Renewing in August – during the window – qualifies for the relaxed rates, assuming your bank is offering attractive terms at that point. The risk of waiting is that rates may be lower in August if banks have already raised what they need. Booking now guarantees today’s rate for the full tenor.
What happens to my deposit if I return to India permanently before maturity? When your residency status changes to Resident, the FCNR(B) deposit can continue until maturity at the agreed rate. On maturity, it is typically converted to a Resident Foreign Currency account or a resident rupee deposit. The deposit is not broken automatically.
Are these deposits covered by deposit insurance? FCNR(B) deposits at scheduled commercial banks are covered by DICGC insurance, currently up to Rs 5 lakh per depositor per bank in rupee equivalent. Given that many FCNR deposits are larger than this equivalent amount, the insurance covers only a portion. This is standard across all Indian bank deposits above the threshold, not specific to FCNR accounts.
I am an OCI card holder, not an Indian passport holder. Am I eligible? Yes. OCI card holders are treated as NRIs for banking purposes and can open and operate NRE and FCNR(B) accounts. For a full breakdown of OCI status and what it allows, see: OCI vs PIO vs NRI Status
Sources and disclaimer
This article is based on the RBI’s amendment directions issued June 17, 2026 (Business Standard, June 17, 2026), the BusinessToday analysis of post-relaxation bank rates (June 22, 2026), HDFC Bank’s published FCNR terms and rate card, IDFC First Bank’s FCNR terms, and Goldman Sachs inflow estimates as reported in Business Standard. Bank rates were current as of June 22, 2026 and change without notice – verify directly with your bank before booking. This article does not constitute financial advice. Consult a qualified financial advisor and, for US residents, a cross-border tax specialist before making investment decisions.
Internal links: NRE vs NRO vs FCNR Account – Full Comparison |
