Top FCNR(B) deposit rates: Banks raise returns on USD, GBP, EUR, CAD and AUD FDs

Foreign Currency Non-Resident (Bank), or FCNR(B), deposits are attracting fresh attention after the government announced it would bear the hedging cost on FCNR(B) deposits until September 30, 2026. The move has prompted several banks to revise their FCNR(B) deposit rates, making these foreign currency fixed deposits more attractive for Non-Resident Indians (NRIs), Persons of Indian Origin (PIOs) and Overseas Citizens of India (OCIs).

Unlike conventional fixed deposits in Indian rupees, FCNR(B) deposits are maintained in designated foreign currencies such as the US dollar (USD), British pound (GBP), euro (EUR), Canadian dollar (CAD) and Australian dollar (AUD). Since both the deposit and repayment are made in the same foreign currency, investors are protected from fluctuations in the Indian rupee.

What is an FCNR(B) deposit?

An FCNR(B) account is a fixed deposit held in a foreign currency by NRIs. It enables eligible depositors to park overseas earnings in India while earning interest without converting funds into rupees.

A key advantage is that both the principal and interest are fully repatriable under the Foreign Exchange Management Act (FEMA), 1999. Depositors receive the maturity proceeds in the same foreign currency in which the deposit was made.

Interest earned on FCNR(B) deposits is also exempt from income tax in India, subject to applicable regulations and eligibility conditions. However, tax treatment may differ in the depositor's country of residence, making it advisable to check local tax rules.

MUST READ: Can banks extend loans to non-residents against FCNR (B) deposits? Here’s what RBI says

Banks offer attractive foreign currency returns

Following the government's announcement, several banks have revised their FCNR(B) deposit rates across currencies. While returns vary by currency and bank, some lenders are offering USD rates as high as 6.75%, with competitive returns available in GBP, EUR, CAD and AUD as well.

FCNR(B) deposit interest rates (1–5 years)

Who should consider FCNR(B) deposits?

FCNR(B) deposits can be suitable for NRIs, PIOs and OCIs who wish to keep their savings in foreign currency while earning fixed returns from India. They also help eliminate exchange rate risk arising from rupee depreciation, making them particularly useful for those who expect to use their savings in the same foreign currency after maturity.

FCNR(B) deposit interest is exempt from income tax in India, provided the applicable eligibility conditions are met.

Before investing, depositors should compare interest rates across banks and understand the applicable tax rules in their country of residence.

MUST READ: BT Explainer: How a special window to attract FCNR (B) deposits can help bring in more forex