Banks Raise FCNR(B) Deposit Rates After RBI Support Measures

Several banks, including $HDFCBANK $YESBANK and $AUBANK have increased interest rates on Foreign Currency Non-Resident (Bank) [FCNR(B)] deposits following recent support measures announced by the RBI. The central bank had introduced temporary relaxations to encourage foreign currency inflows and strengthen liquidity. In response, banks have raised FCNR(B) deposit rates across select tenures to attract deposits from Non-Resident Indians (NRIs). FCNR(B) deposits allow NRIs to hold fixed deposits in foreign currencies such as the US dollar, pound sterling and euro, helping them avoid exchange rate risk on principal and interest. Higher rates could make these deposits more attractive at a time when global interest rates remain relatively elevated. The move is expected to support foreign currency inflows into the banking system while helping banks diversify their funding sources. It also reflects growing competition among lenders to attract NRI deposits under the RBI’s revised framework. What This Means * Higher FCNR(B) rates could attract more NRI deposits. * Banks gain access to additional foreign currency funding. * RBI’s measures are aimed at supporting liquidity and inflows. Key Things to Watch Going Forward 1. Further changes in FCNR(B) deposit rates. 2. Growth in NRI deposit inflows. 3. Impact of global interest rate trends. 4. RBI’s future liquidity and currency management measures. Opinion The rate hikes highlight how banks are responding quickly to the RBI’s efforts to boost foreign currency inflows. For NRIs, the higher returns improve the appeal of FCNR(B) deposits, particularly for those seeking currency protection along with fixed-income returns. The success of the initiative will depend on how competitive Indian banks remain compared to overseas alternatives and how global interest rate conditions evolve. Source: NDTV Profit No Recommendations