Banks in India are witnessing a steady rise in overseas funds after the Reserve Bank of India (RBI) revised its Foreign Currency Non-Resident Bank (FCNR-B) deposit scheme.
With growing awareness among Non-Resident Indians (NRIs), inflows are expected to increase further in the coming weeks.
According to reports, banks have already mobilised around $3–4 billion through FCNR-B deposits so far, and the momentum is likely to strengthen.
Stronger Inflows Expected from Gulf-Based NRIs
Bankers believe that deposit inflows will pick up pace soon, especially from NRIs living in the Gulf region, which is expected to be a major contributor.
Overall, the revised scheme could attract $40–50 billion in fresh deposits over time, according to banking sources.
Higher interest rates and RBI support for hedging costs are seen as key reasons driving this growth.
Banks have also increased outreach efforts in overseas markets to promote the scheme and encourage more participation from NRI customers.
Higher Interest Rates to Attract Depositors
One of the biggest changes under the revised scheme is the increase in interest rates offered on FCNR-B deposits.
Small finance banks are offering up to 7.5% interest
Large banks are offering up to 6.5% interest
These attractive rates are designed to encourage NRIs to park more of their savings in India, especially in foreign currency deposits.
RBI Support Boosts Confidence in the Scheme
The renewed interest in FCNR-B deposits follows the RBI’s decision in June to support banks by bearing hedging costs on deposits with maturities of 3 to 5 years.
This step is aimed at encouraging banks to raise more stable foreign currency deposits and improve overall foreign exchange inflows into the country.
In addition, the RBI has temporarily relaxed interest rate restrictions to help banks offer better returns on both FCNR(B) and NRE deposits.
What Changed in RBI Rules?
Under the revised rules, valid until September 30, 2026, several restrictions have been eased:
No interest rate cap on FCNR(B) deposits with maturity of 3–5 years
No restriction on interest rates for fresh NRE deposits of 3 years and above
Earlier, banks had to follow strict limits on how much interest they could offer, which reduced flexibility.
Now, banks can offer higher rates to attract more NRI savings and strengthen India’s foreign exchange reserves.
What This Means for NRIs and Banks
The new policy gives banks more freedom to design attractive deposit schemes for NRIs.
At the same time, it helps India attract more stable foreign currency inflows.
With stronger interest rates and relaxed rules, the FCNR-B scheme is expected to become more popular, especially among overseas Indians looking for safe and rewarding investment options.
