If you’re an NRI looking for a safe way to grow your foreign currency savings while earning attractive returns, RBI’s latest FCNR(B) deposit measures have likely caught your attention. In June 2026, the Reserve Bank of India introduced special incentives to attract foreign currency inflows, making the FCNR(B) deposit scheme more rewarding for banks and depositors.
As banks begin offering significantly higher interest rates on fresh FCNR(B) deposits, many NRIs are asking one important question: Is RBI’s new FCNR(B) deposit scheme worth it? The answer depends on your investment goals, liquidity needs, and appetite for currency risk. Let’s break it down.
What Is RBI’s New FCNR(B) Deposit Scheme?
The Foreign Currency Non-Resident (Bank) or FCNR(B) deposit is a fixed deposit account specifically designed for NRIs. Unlike NRE fixed deposits, FCNR(B) deposits are maintained in foreign currencies such as USD, GBP, EUR, AUD, CAD, and JPY.
In June 2026, the RBI announced a series of measures aimed at attracting foreign capital and strengthening India’s external position. One of the most significant changes was allowing banks to raise fresh FCNR(B) deposits more aggressively by absorbing the entire hedging cost for eligible deposits with maturities between three and five years. Additionally, RBI temporarily removed interest rate caps on fresh FCNR(B) and NRE deposits until September 30, 2026. These changes enable banks to offer higher interest rates to NRIs while keeping their own funding costs manageable.
Why Did RBI Introduce This Scheme?
The move comes at a time when global uncertainties, foreign capital outflows, and pressure on emerging-market currencies have heightened the need for stable foreign-exchange inflows. RBI’s objectives are straightforward:
- Increase foreign currency deposits from NRIs.
- Strengthen India’s forex reserves.
- Improve banking sector liquidity.
- Support the stability of the rupee amid global volatility.
The strategy is akin to the FCNR(B) mobilization drive launched in 2013, which successfully attracted substantial foreign currency inflows into India. Analysts estimate that this current initiative could bring between $35 billion and $40 billion into the Indian banking system.
What Has Changed in the New FCNR(B) Scheme?
The 2026 measures have made FCNR(B) deposits significantly more attractive than they were just a few months ago.
- RBI to Cover Hedging Costs: The RBI will absorb the hedging costs for eligible fresh FCNR(B) deposits until September 30, 2026. This allows banks to offer higher interest rates to depositors.
- Lifted Interest Rate Caps: The RBI has temporarily removed interest rate ceilings on FCNR(B) and NRE deposits until September 30, 2026, enabling banks to provide more competitive returns.
- Increased Deposit Rates: Experts anticipate FCNR(B) rates may rise by 100-200 basis points due to RBI measures, with some banks already increasing their rates significantly.
Key Benefits of RBI’s New FCNR(B) Deposit Scheme
Look at the points below to find out the benefits of RBI’s New FCNR(B) deposit scheme in detail:
- Attractive Returns in Foreign Currency: FCNR(B) deposits offer fixed returns in foreign currency, potentially reaching up to 7%, as banks reduce hedging costs.
- Protection Against Rupee Depreciation: These deposits are maintained in foreign currency, protecting your principal from depreciation of the Indian rupee.
- Tax Benefits for NRIs: Interest on FCNR(B) deposits is usually exempt from income tax in India, enhancing post-tax returns for NRIs.
- Full Repatriation: Both principal and interest can be freely repatriated abroad.
- Lower Risk Compared to Market Investments: FCNR(B) deposits provide predictable returns, making them a safer choice for conservative investors.
FCNR(B) vs NRE Fixed Deposits: Which Is Better?
Look at the table below to find the difference between FCNR(B) vs NRE fixed deposits and find out which is better for you.
| Feature | FCNR(B) Deposit | NRE Fixed Deposit |
| Currency | Foreign Currency | Indian Rupees |
| Exchange Rate Risk | None | Present |
| Repatriation | Fully Repatriable | Fully Repatriable |
| Tax on Interest | Generally Tax-Free | Generally Tax-Free |
| Return Potential | Stable | May Benefit from INR Rates |
| Suitable For | Wealth Preservation | Rupee-Based Investments |
For NRIs concerned about currency fluctuations, FCNR(B) deposits offer a clear advantage as the funds remain denominated in foreign currency throughout the deposit’s tenure.
Are There Any Risks?
While the scheme appears attractive, it isn’t without its drawbacks:
- Limited Liquidity: Most benefits apply to deposits with maturities ranging from three to five years. Premature withdrawals may incur penalties or reduced interest.
- Interest Rates May Not Remain High: The special support from the RBI is temporary and currently available only until September 30, 2026. Future FCNR(B) offerings may not provide similar returns.
- Opportunity Cost: Aggressive investors might find higher long-term returns in equities, mutual funds, or diversified global portfolios.
Who Should Consider Investing?
Are you confused about whether the RBI’s New FCNR(B) Deposit Scheme is ideal for you or not? Then look below to find that out:
Ideal For:
- NRIs holding surplus funds in USD, GBP, EUR, AUD, or CAD
- Investors seeking stable returns
- Conservative investors nearing retirement
- Individuals concerned about the depreciation of the rupee
- NRIs looking for tax-efficient fixed income
Not Ideal For:
- Investors needing quick access to their funds
- Traders seeking short-term gains
- Individuals comfortable with higher-risk investments
Looking for market growth instead? If you prefer equities or mutual funds over fixed deposits, check out our update on RBI New Investment Rules 2026: What NRIs and OCI Cardholders Must Know.
How Much Can Banks Potentially Raise?
The banking industry is optimistic about the scheme. Punjab National Bank estimates that Indian banks could mobilize between $35 billion and $40 billion through FCNR(B) deposits under the RBI’s special framework.
Several large banks, including SBI, Bank of Baroda, Federal Bank, Canara Bank, and Indian Bank, are actively targeting NRI deposits through this initiative.
Industry experts also estimate that FCNR(B) Deposit Scheme inflows may range between $35 billion and $45 billion, highlighting the potential scale of participation.
What Experts Are Saying?
Financial analysts believe the new framework is more appealing than traditional FCNR(B) products due to the RBI’s reduction of banks’ cost burdens. Research suggests this policy could boost deposit economics, allowing interest rates to rise by up to 200 basis points and facilitating the acquisition of foreign-currency resources for banks.
While some experts doubt reaching the peaks of the 2013 FCNR(B) deposit scheme initiative, the current interest rate gap between India and developed markets remains favorable for positive results.
Conclusion- Is RBI’s New FCNR(B) Deposit Scheme Worth It?
For many NRIs, YES. The FCNR(B) scheme offers higher interest rates, tax-efficient income, protection from rupee depreciation, and RBI support until September 30, 2026. The removal of interest rate caps and the RBI’s absorption of hedging costs make it an appealing fixed-income option.
If your goals include capital preservation and stable returns, consider the FCNR(B) scheme before the deadline. Be sure to compare rates, review lock-in conditions, and align the investment with your financial objectives.
Disclaimer
The content published on NriTaxs is intended for informational purposes only and does not constitute legal, tax, or financial advice. Readers are encouraged to consult qualified professionals before making any decisions based on the information provided.
