FCNR(B) Rates Hit 7.50% for NRIs: Which Banks Are Offering the Highest Rates in August 2026?

FCNR(B) rates reached 7.50% in August 2026, with select banks offering some of the highest returns currently available to NRIs. Ujjivan SFB and ESAF SFB are leading the rates, followed by AU SFB, Bank of Baroda, HDFC Bank and ICICI Bank.

But the headline 7.50% rate does not apply to every deposit. Rates vary by bank, currency, tenure and deposit amount. Here’s a look at the latest FCNR(B) rates and what NRIs should check before locking in their foreign-currency savings.

What Is an FCNR(B) Account?

An FCNR(B) account  Foreign Currency Non-Resident (Bank) account  helps NRIs open a fixed deposit in India in a foreign currency like USD, GBP, EUR, AUD or CAD, instead of converting their earnings into rupees. Because your money stays in the original currency, you’re fully shielded from rupee depreciation or appreciation during the deposit tenure. The interest is paid in the same foreign currency, and both principal and interest are freely repatriable.

Why Are FCNR(B) Interest Rates So High in August 2026?

This isn’t a random rate hike by a couple of banks,  it’s a policy-driven shift. In June 2026, the Reserve Bank of India removed the interest rate ceiling on fresh FCNR(B) deposits with maturities of three to five years, giving banks room to price these deposits far more aggressively than before to pull in foreign currency inflows. On top of that, the government has been absorbing the hedging cost on 3-5 year FCNR(B) deposits through September 30, 2026, which effectively makes it cheaper for banks to offer higher rates without taking on extra currency risk themselves.

The combined result: within a matter of weeks, banks across the board  from small finance banks to large private lenders have been revising their FCNR(B) rates upward, some by as much as 40 to 100 basis points. This is squarely aimed at strengthening India’s foreign exchange reserves by encouraging NRIs to bring in and lock up dollars for the medium term.

Highest FCNR(B) Interest Rates for NRIs in August 2026

Before you decide where to park your dollars, here’s a side-by-side look at the highest USD FCNR(B) rates currently on offer.

Notice the pattern here: small finance banks are leading the pack by a wide margin, while the larger, more established private banks are being comparatively conservative even after their own rate hikes. That trade-off between rate and institutional size is something we’ll come back to later in this guide.

Ujjivan Small Finance Bank FCNR(B) Interest Rate

Highest Ujjivan FCNR(B) Rate

Ujjivan Small Finance Bank currently offers 7.50% p.a. on USD FCNR(B) deposits for the 3 to 5-year tenure up from its earlier rate of 7.13%, which was already among the highest in the industry before this revision. The bank made this change after the RBI lifted the rate ceiling on 3-5 year FCNR(B) deposits, and it applies specifically to fresh USD deposits booked in this bracket. Interest on FCNR(B) deposits is typically paid semi-annually, and being a scheduled commercial bank, Ujjivan’s FCNR(B) deposits carry the same regulatory protections as any other scheduled bank in India.

ESAF Small Finance Bank FCNR(B) Interest Rate

Highest ESAF FCNR(B) Rate

ESAF Small Finance Bank’s FCNR(B) rates aren’t flat across all deposit sizes, so don’t assume 7.50% applies to every amount you put in. The bank offers 7.50% p.a. on USD FCNR(B) deposits below the equivalent of USD 10 lakh, and a higher 7.75% p.a. on deposits of USD 10 lakh and above both for the 5-year tenure. These are the highest published FCNR(B) rates among all banks we’ve compared in this guide.

A few conditions to keep in mind: the minimum tenure for ESAF’s FCNR(B) deposits is 1 year and the maximum is 5 years, deposits of USD 500,000 and above in tenure buckets under 3 years get an additional 0.10% interest, and deposits of USD 10 lakh and above in the 5-year bucket get an extra 0.25%. No interest is paid if you break the deposit before completing 7 days, and premature withdrawal beyond that attracts a penal rate deduction as per the bank’s guidelines. So the 7.50-7.75% headline is real, but it’s tied to the 5-year tenure and specific deposit-size slabs always confirm your exact bracket with the bank before booking.

AU Small Finance Bank FCNR(B) Interest Rate

Highest AU FCNR(B) Rate

AU Small Finance Bank raised its peak FCNR(B) rate from 7.10% to 7.40% p.a. for the 3 to 4-year tenure, effective July 27, 2026. This move came alongside a parallel hike in AU SFB’s NRE fixed deposit rate, from 7.00% to 7.60% p.a. on the 36-months-1-day to 45-months bracket. The bank cited the RBI’s June 8, 2026 circular as the basis for this additional headroom on FCNR(B) pricing.

AU SFB pays interest on FCNR(B) deposits semi-annually and continues to offer zero forex margin and zero bank charges on eligible inward and outward remittances for NRI customers, which is worth factoring in if you’re also sending money regularly from abroad. If you’re deciding how to allocate between an FCNR(B) deposit and NRE mutual fund investments, our article on NRI mutual fund decisions after moving to the US lays out that comparison in more detail.

Bank of Baroda FCNR(B) Interest Rate

Highest Bank of Baroda FCNR(B) Rate

Bank of Baroda is offering its highest FCNR(B) rate of 6.50% p.a. on the 4 to 5-year tenure, effective from July 13, 2026 — a hike of up to 50 basis points over its previous rates. As a large public sector bank, Bank of Baroda’s current rate page confirms these rates apply to fresh deposits opened under the scheme, and the deposit carries a lock-in of one year, meaning no interest is paid if you withdraw before completing 12 months.

HDFC Bank FCNR(B) Interest Rate

Highest HDFC FCNR(B) Rate

HDFC Bank raised its FCNR(B) rate by 25 basis points, from 6.00% to 6.25% p.a., on tenures from 3 to 5 years, effective August 1, 2026. This is the bank’s current peak rate on USD deposits in this bracket. HDFC’s rate table also shows different rates across other eligible currencies like GBP, EUR, AUD and CAD, so the 6.25% figure applies specifically to USD deposits. Always check the currency-wise breakdown before booking if you’re holding a different currency.

ICICI Bank FCNR(B) Interest Rate

Highest ICICI FCNR(B) Rate

ICICI Bank’s current FCNR(B) rates, effective August 4, 2026, show 6.25% p.a. on the 36 to less than 48-month bucket and longer tenures but only for deposits above USD 4 million. For deposits below that threshold, the applicable rate drops to 6.00%. This is an important distinction most headline comparisons skip: ICICI’s “highest rate” isn’t accessible to a typical retail NRI depositor putting in a more modest amount. If your deposit size is smaller, it’s worth directly comparing ICICI’s actual applicable slab against the small finance bank rates above rather than the advertised peak number.

Latest FCNR(B) Interest Rates Offered by Select Banks

Hidden Risks of FCNR(B) Deposit Investment and Leverage

A 7.50% headline rate looks great on paper, but it doesn’t tell you the whole story. Before you move a large chunk of your savings into a 5-year FCNR(B) deposit, it’s worth understanding what that number doesn’t show you.

High Interest Does Not Mean High Overall Return

The interest rate is quoted per annum, but your actual return depends heavily on when you’ll need the money back, what currency you’re comparing it against, and what you’d have earned on that same money elsewhere including in your country of residence. A 7.50% USD rate sounds high next to typical US savings account rates, but it needs to be compared against other dollar-denominated options you have access to abroad, not just against other Indian bank rates.

Currency and Reinvestment Risk

FCNR(B) protects you from INR volatility during the deposit tenure  but it doesn’t protect you from what happens after maturity. If USD-INR moves sharply in either direction by the time your 3-5 year deposit matures, your effective return in your home currency, or your decision on whether to repatriate or reinvest, changes accordingly. Similarly, if rates fall back down by the time you’re ready to reinvest at maturity, you lose the benefit of today’s elevated rates going forward.

Premature Withdrawal Risk

Nearly every bank in this comparison applies a penalty if you break the FCNR(B) deposit before it matures, and several including ESAF and Bank of Baroda pay zero interest if you withdraw within the first 7 to 12 months. Given that today’s highest rates are concentrated in the 3 to 5-year bracket, locking in means committing your dollars for a meaningfully long period. Make sure this money isn’t something you’ll need access to for an emergency, a property purchase, or a move back to India within that window.

Bank-Specific Conditions

The headline rate at ESAF and ICICI only applies above certain deposit thresholds below those, you get a noticeably lower rate. Small finance banks like Ujjivan, ESAF, and AU SFB are regulated and DICGC-insured up to ₹5 lakh per depositor per bank, same as any scheduled bank, but they don’t carry the same institutional scale or branch network as HDFC, ICICI, or SBI. That’s a genuine trade-off between rate and institutional comfort that only you can weigh based on your own risk appetite.

Leverage Can Magnify Losses

Some NRIs consider taking a loan against their FCNR(B) deposit to invest elsewhere, effectively leveraging the deposit. While this is permitted within RBI guidelines, it adds a layer of risk: if the investment you’re funding with that borrowed money underperforms, you’re still on the hook for the loan against a deposit that’s locked in for years. FCNR(B) deposits are meant to be a stable, protected part of your portfolio  using them as collateral for leveraged bets works against that core purpose.

Is FCNR(B) Interest Tax-Free for NRIs?

Yes — FCNR(B) interest earned while you hold NRI status is exempt from income tax in India, and no TDS is deducted on it. This is one of the biggest advantages FCNR(B) has over an NRO fixed deposit. That said, tax exemption in India doesn’t automatically mean the interest is tax-free in your country of residence. US-based NRIs, for instance, are generally required to report and pay tax on this interest under US tax rules, since the US taxes its residents on worldwide income. If you’re unsure how this interacts with your overall filing obligations, it’s worth reading through our breakdown on Indian capital gains tax for US-based NRIs, which touches on how India-sourced income is treated once you’re filing in a second country.

FCNR(B) vs NRE FD- Which Is Better for NRIs?

Should NRIs Lock in a 7.50% FCNR(B) Rate?

For NRIs who already hold or expect meaningful savings in foreign currency and don’t need that money in the near term, this rate environment is genuinely one of the better windows in recent years to lock in a multi-year FCNR(B) deposit particularly with the RBI’s rate ceiling removed and the government absorbing hedging costs only until September 30, 2026. That timeline itself is worth noting: if you’re planning to take advantage of these elevated rates, it makes sense to compare and book sooner rather than later, since there’s no guarantee this pricing window stays open indefinitely.

That said, chasing the single highest number across all banks isn’t necessarily the right call for everyone. If deposit insurance coverage, branch access, or long-term banking relationship matters more to you than an extra 1% in yield, a 6.25-6.50% rate at a larger bank may still be the more comfortable choice. As always, match the tenure to money you genuinely won’t need for 3-5 years, and confirm the exact rate applicable to your specific deposit amount and currency directly with the bank before you book.

Conclusion

FCNR(B) rates touching 7.50% is a rare event, and it’s happening because of a specific, time-bound policy push from the RBI rather than a permanent shift in the market. Small finance banks are currently leading on rate, while larger banks remain more conservative but arguably steadier. Whichever bank you choose, the real decision isn’t just about who’s offering the highest number today, it’s about matching the tenure, currency, and lock-in to your actual financial plan over the next few years.

If you’re weighing an FCNR(B) deposit as part of your broader NRI financial and tax planning, get in touch with our team at NRITaxs.com we can help you look at this alongside your residential status, repatriation plans, and overall portfolio before you commit your savings.