FCNR Deposits Are Suddenly Paying 6–7%: What Every NRI Needs to Know
If you are a Non Resident Indian sitting on US dollars, the last few days have changed the math on where you park them. The Reserve Bank of India opened a special foreign currency swap window for banks, and within 48 hours Indian banks repriced their FCNR deposits sharply higher. USD deposits that paid 3.5% a week ago are now fetching 6% to over 7%, completely free of currency risk and free of tax in India. Here is the full picture and how to act on it.
Contents:
1. Latest FCNR deposit rates across banks
We spent some time on finding FCNR rates from all major banks so you don't have to:
Bank (USD FCNR-B) | 3 yr | 4 yr | 5 yr |
AU Small Finance Bank | 7.10% | 7.00% | 7.00% |
Karur Vysya Bank | 7.00% | 7.00% | 7.00% |
ICICI Bank | 6.00% | 6.00% | 6.00% |
Kotak Mahindra Bank (≤ $1M) | 6.00% | 6.00% | 6.00% |
Kotak Mahindra Bank (> $1M) | 6.15% | 6.15% | 6.15% |
HDFC Bank | 6.00% | 6.00% | 6.00% |
Axis Bank | 6.00% | 6.00% | 6.00% |
Bank of Baroda | 5.50% | 5.75% | 6.00% |
Central Bank of India | 6.00% | 6.00% | 6.00% |
State Bank of India (≤ $1M) | 5.25% | 5.50% | 5.75% |
State Bank of India (> $1M) | 5.50% | 5.75% | 6.00% |
The window is time-limited
The RBI is bearing the hedging cost only on deposits booked up to 30 September 2026. The elevated rates are tied to this window, so the attractive pricing is unlikely to last indefinitely. Not sure whether to lock in now? Talk to our team before the window closes.
2. How this compares with HYSAs, US CDs and Treasuries
Feature | FCNR(B) USD | US HYSA | US CD | US Treasury |
Typical yield (USD) | 6.0%–7.1% (3–5 yr) | 3.0%–4.5% | 3.7%–4.25% | 3.7%–4.55% |
Where held | Indian bank | US bank / fintech | US bank | US government |
Tax on interest | Tax free in India for NRIs* | Taxable in US | Taxable in US | Federal taxable, state exempt |
Liquidity | 1 yr lock; 3–5 yr term | Fully liquid | Locked to maturity | Liquid (secondary mkt) |
Currency risk | None | None | None | None |
Backing | Indian bank (DICGC ₹5L) | FDIC $250k | FDIC $250k | Full faith & credit of US |
* US persons are taxed by the IRS on worldwide income, including FCNR interest, and must report foreign accounts (FBAR/FATCA).
High-yield savings accounts (HYSA) — specific providers
Provider | APY (approx.) | Notes |
SoFi | 4.50% | With qualifying direct deposit (else ~1.20%) |
Marcus by Goldman Sachs | 4.25% | No fees, no minimum |
Discover | 4.25% | No fees, no minimum |
Ally Bank | 4.20% | No fees, no minimum |
American Express (Amex) | 4.00% | No fees, no minimum |
Revolut | 4.00% – 5.50% | Standard 4.00%, Metal plan up to 5.50% (caps apply) |
Synchrony | 3.40% | ATM card; fee reimbursements |
Wealthfront (Cash) | 3.30% | +0.25% with direct deposit |
Capital One 360 | 3.00% | No fees, no minimum |
APYs as of early June 2026, sourced from provider sites / Bankrate, NerdWallet, CNBC; promotional and tiered rates noted. Rates change frequently.
US certificates of deposit (CDs) — specific banks
Bank | 1-yr APY | Range (all terms) | Notes |
First National Bank of America | 3.95% | 3.60–4.25% | Peak 4.25% |
TAB Bank | 4.00% | 4.00–4.20% | 1–5 yr; $1,000 min |
Popular Direct | 4.11% | 3.30–4.11% | $10,000 min |
E*TRADE (Morgan Stanley) | 4.10% | 4.00–4.10% | No minimum |
Marcus by Goldman Sachs | 3.90% | 3.70–4.00% | $500 min |
Synchrony Bank | 4.00% | 0.25–4.00% | No minimum |
American Express | 3.30% | 3.00–3.30% | No minimum |
APYs as of late May / early June 2026 (Bankrate). Top CD rates currently sit on shorter terms, longer terms vary by bank.
US Treasury yields
Treasuries are the risk-free benchmark — backed by the US government, exempt from state and local tax, and easy to sell before maturity. The current curve (approximate):
US Treasury maturity | Yield (approx., mid-Jun 2026) |
3 months | 3.70% |
6 months | 3.75% |
1 year | 3.85% |
2 years | 4.13% |
3 years | 4.15% |
5 years | 4.25% |
10 years | 4.55% |
30 years | 5.03% |
Source: U.S. Department of the Treasury daily par yield curve; figures approximate as of mid-June 2026.
Across every one of these dollar alternatives, FCNR(B) is now paying more The trade-off is liquidity. A HYSA and Treasuries stay accessible, while FCNR locks your money for the term. The right answer usually involves a mix: keep an emergency buffer liquid in a HYSA and term out the dollars you won’t need for 3–5 years into FCNR.
Need help with financial planning? Our team of experts is always happy to help. Feel free to reach out at help@reymanwealth.com
3. Planning to return to India? Lock in before you land
This window is especially valuable if you are thinking about moving back to India in the next few years.
The single most important point: you must be a non-resident (NRI) to open an FCNR deposit.
Once you return for good and become a resident, that door closes for new FCNR deposits. So the play is to book your FCNR deposits while you are still abroad to lock today’s elevated rate for years.
Doing so before you land gives you three advantages at once:
you capture the scheme’s high USD rate for the full term,
you keep the interest tax free in India through your non resident years,
you extend that tax free treatment into your post return RNOR period (explained below).
Timing the booking around your move can be worth several years of tax free, above market dollar interest.
Returning in the next 1–5 years? There’s a right sequence to booking FCNR, choosing tenures, and timing your return to maximise the tax free runway. We map this out for returning NRIs every week
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Reyman Tips: If you are returning from the US, don't forget to reset your cost basis during the RNOR period to book tax free capital gains.
4. Returned to India for good? Can you still hold FCNR?
Short answer - Yes.
Under FEMA, when an FCNR account holder becomes a resident of India, the deposit may continue until maturity at the originally contracted rate.
You don’t have to break it the day you land. What you cannot do is open a fresh FCNR deposit as a resident.
At maturity you have two clean options:
You can convert the proceeds to rupees in a resident account, or
move them into a Resident Foreign Currency (RFC) account. An RFC account is designed exactly for returning NRIs. It lets you continue holding foreign currency as a resident, with flexibility to remit abroad later, subject to FEMA rules.
The tax angle is where planning pays off. FCNR (and RFC) interest is exempt from Indian tax as long as your residential status is Resident but Not Ordinarily Resident (RNOR). Most returning NRIs qualify as RNOR for up to 2 to 3 years after moving back.
During that RNOR window your FCNR/RFC interest stays tax free in India. Once you become an ordinary resident (ROR), the interest becomes taxable like any other resident fixed deposit, and TDS applies. Summary:
While abroad (NRI): open FCNR, interest tax free in India.
Just returned (RNOR): existing FCNR continues to maturity, interest still tax free, convert to RFC at maturity to keep dollars.
Ordinary resident (ROR): no new FCNR, existing FCNR/RFC interest becomes taxable in India.
Get your residency timeline right RNOR status, the day count rules, and when interest turns taxable are easy to miscalculate. The cost of getting it wrong is real tax on what could have stayed exempt. Reyman Wealth can map your residency and FCNR timeline so nothing slips.
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5. Why FCNR belongs in your defensive portfolio
Think of FCNR as the conservative, capital preservation sleeve of an NRI portfolio.
No currency risk. You deposit dollars and are repaid in dollars at a contracted rate. Unlike an NRE rupee deposit, a falling rupee cannot erode your principal or interest.
Predictable, fixed return. The rate is locked for the full term, so a 6–7% USD yield is contractually yours regardless of where US or Indian rates head next.
Tax efficient. Interest is exempt from Indian income tax while you are a non resident and RNOR.
Diversifies your bank and country risk. Holding part of your safe assets with a strong Indian bank diversifies away from a single US institution.
Higher real yield than cash alternatives. At current pricing FCNR out yields US HYSAs and CDs while keeping the defensive, fixed income character intact.
6. What the RBI actually did
FCNR(B) deposits are fixed deposits NRIs hold in a foreign currency (USD, GBP, EUR, etc.) with an Indian bank. The bank takes your dollars and pays you a fixed dollar rate. You carry no rupee exchange rate risk because you put in dollars and take out dollars.
The catch has always been the bank’s hedging cost. To use those dollars in India the bank must hedge the currency, so the rate it could pass on to you stayed low.
Under the new scheme the RBI itself absorbs that entire hedging cost on fresh 3-5 year FCNR(B) deposits until 30 September 2026. With the hedging burden lifted, banks can pass roughly 200–300 basis points more to depositors. The aim is to attract foreign capital and support the rupee. The last time the RBI ran a comparable scheme, in 2013, it pulled in around $34 billion.
7. The bottom line
Whether you’re building a defensive allocation, parking dollars you won’t need for a few years, or planning a return to India, this is a window worth using deliberately rather than missing.
8. Interest rate explorer (Beta)
We created an interest rate explorer for you to play around with:
Talk to Reyman Wealth
Cross-border tax and financial planning built for NRIs and returning Indians. We help you decide how much to put in FCNR, which bank and tenure to choose, how to coordinate it with your US accounts, and how to time your return for maximum tax efficiency. Reach out at help@reymanwealth.com for a personalised plan.
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