Non-Resident Indians (NRIs) looking for better returns on their savings may have a new opportunity.
YES Bank has significantly increased interest rates on Foreign Currency Non-Resident (Bank) or FCNR(B) deposits, becoming one of the first major lenders to respond to the Reserve Bank of India’s latest measures aimed at attracting foreign currency into the country.
The move comes shortly after the RBI announced special relaxations to encourage banks to bring in more foreign currency deposits and support the Indian rupee.
YES Bank Raises FCNR Deposit Rates
According to reports, YES Bank has increased FCNR(B) deposit rates by as much as 335 basis points.
The bank is now offering:
7% interest on 3-year FCNR(B) deposits
7.05% interest on 4-year deposits
7.10% interest on 5-year deposits
Earlier, the highest rates on similar deposits were around 4%, making this a significant jump for NRI investors seeking fixed returns.
Other Banks Have Also Followed
YES Bank is not the only lender increasing rates.
Several other banks have also revised their FCNR(B) deposit offerings after the RBI’s announcement.
HDFC Bank
HDFC Bank has increased rates by 235 to 265 basis points and is now offering around 6% interest on FCNR(B) deposits with tenures ranging from three to five years.
AU Small Finance Bank
AU Small Finance Bank has also raised rates by 195 basis points.
The bank is currently offering:
7.1% interest on 3-year deposits
7% interest on 5-year deposits
The trend suggests that more banks may revise their rates in the coming weeks to attract NRI funds.
Why Are Banks Increasing Rates?
The rate hikes come after the RBI introduced regulatory relaxations designed to boost foreign currency inflows into India.
On June 8, the central bank announced that fresh FCNR(B) deposits mobilized between now and September 30, 2026, would be exempt from:
Cash Reserve Ratio (CRR) requirements
Statutory Liquidity Ratio (SLR) requirements
The exemption applies to fresh FCNR(B) deposits with maturities between three and five years.
How Does the RBI’s Move Help Banks?
Normally, banks are required to keep a portion of deposits aside to meet CRR and SLR requirements.
With the new exemption, banks can use a larger share of the funds they receive through FCNR(B) deposits.
This gives them greater flexibility and allows them to offer higher interest rates to attract NRI customers.
In simple terms, banks can now earn more from these deposits, making it easier to pass some of the benefit on to depositors through higher returns.
RBI’s Bigger Plan to Boost Foreign Currency Inflows
The latest relaxation is part of a broader strategy announced by RBI Governor Sanjay Malhotra earlier this month.
The central bank has also introduced a new US Dollar-Rupee swap facility, aimed at encouraging banks to bring more foreign currency into the Indian financial system.
By attracting additional dollar inflows, the RBI hopes to strengthen foreign exchange reserves and provide support to the rupee amid global economic uncertainties.
What It Means for NRIs
For NRIs, the latest changes could translate into some of the most attractive FCNR(B) deposit rates seen in recent years.
With some banks now offering returns above 7%, FCNR deposits are becoming a more appealing option for those looking to earn fixed returns while keeping their money in foreign currency.
As more banks respond to the RBI’s measures, competition for NRI deposits could increase further, potentially leading to even more attractive offers in the coming months.
