ICICI Bank and Axis Bank have increased interest rates on their Foreign Currency Non-Resident (FCNR-B) deposit schemes.
The move is aimed at attracting more deposits from Non-Resident Indians (NRIs) and boosting foreign currency inflows into the Indian banking system.
Both banks are now offering up to 6% interest on FCNR(B) deposits with a tenure of 3 to 5 years.
ICICI Bank and Axis Bank Raise FCNR Deposit Rates
ICICI Bank has increased the interest rate on FCNR(B) deposits with a 3- to 5-year tenure by 3.1 percentage points. After the revision, customers can now earn 6% interest on these deposits.
Axis Bank has also revised its FCNR(B) rates for the same tenure. The bank has increased the rate by 3.05 percentage points and will now offer 6% interest on deposits with a maturity period of 3 to 5 years.
The rate hike comes as banks compete to attract more foreign currency deposits from NRIs.
Why Are Banks Increasing FCNR Rates?
Banks are looking to strengthen their foreign currency reserves and bring more overseas funds into the Indian banking system.
As competition for foreign currency deposits increases, several banks have started offering higher returns to make FCNR(B) accounts more attractive for NRI customers.
Higher interest rates can encourage NRIs to park more money in Indian banks, especially when returns become more competitive.
What Is an FCNR(B) Account?
An FCNR(B) account allows NRIs to keep their savings in foreign currencies such as US dollars, British pounds, euros, and others.
One of the biggest advantages of these accounts is that depositors are protected from exchange rate fluctuations. Since the money remains in foreign currency, investors do not have to worry about currency conversion losses.
With interest rates now reaching 6%, FCNR(B) deposits have become a more attractive investment option for many NRIs.
More Banks May Follow
If other major banks introduce similar rate hikes, foreign currency deposit inflows could increase further in the coming months.
Higher foreign currency deposits can also help improve the liquidity position of the Indian banking sector and strengthen the availability of overseas funds.
