FCNR Deposit Rates: Which Indian banks are offering the highest return to NRIs? – NRI News

If you are a non-resident Indian (NRI), person of Indian origin (PIO), or an overseas citizen of India (OCI), seeking higher interest rates on savings compared to your current country of residence, consider opening a Foreign Currency Non-Resident (FCNR) Account in India.

Deposits under the Foreign Currency Non-Resident Scheme mean term deposits received by the bank for a fixed period and withdrawable only after the expiry of the original fixed period.

NRIs living abroad who want to earn a higher rate of interest on their savings make use of the FCNR, or Foreign Currency Non-Resident account. FCNR deposits enable NRIs to save foreign currency earnings and earn higher interest rates. FCNR Accounts provide tax-free interest on these earnings, allowing NRIs to keep funds in the original currency, thus avoiding currency exchange risks.

“The primary attraction of FCNR deposits lies in zero currency risk—both principal and interest are maintained in foreign currency, eliminating the impact of rupee depreciation. Additionally, interest earned on FCNR deposits is tax-free in India (subject to residential status), making it highly efficient from a tax perspective. NRIs also benefit from relatively competitive interest rates compared to global benchmarks, along with the safety and regulatory framework of the Indian banking system,” says CA Ruchika Bhagat, MD, Neeraj Bhagat & Co.

One can choose from over 9 currencies, including US dollars, British pounds and Canadian dollars to deposit in FCNR accounts in India. There is no limit on transfers to and from India once your deposit matures, as the account is fully repatriable.

Banks may allow NRIs to convert FCNR (B) deposits upon maturity into either a Resident Rupee Deposit Account or an RFC Account, based on the account holder’s choice. The interest rate on the new deposit should correspond to the applicable rate for that type of account.

FCNR (B) Account Features

FCNR(B) deposits are accepted for a minimum period of one year and a maximum of five years. No interest is paid on FCNR(B), FCNR Plus, and RFC deposits that are prematurely closed before the completion of one year from the date of opening.

For deposits closed prematurely after one year, interest is paid at the rate applicable for the period the deposit remained with the bank — either the rate prevailing on the date of opening or the contracted rate, whichever is lower — minus 100 basis points (1%). Senior citizens are not entitled to any additional interest rate on investments made in NRI fixed deposits, including NRE, NRO, RFC, and FCNR accounts.

Maturity proceeds from FCNR(B) deposits can be fully repatriated, and no income tax is deducted on interest earned in FCNR(B) deposits. The interest is payable in the same currency as the deposit, either at half-yearly intervals or on maturity.

“A key point NRIs should keep in mind is that while interest on FCNR deposits is tax-free in India, it may still be taxable in their country of residence depending on local tax laws. Therefore, NRIs should review the tax treatment under the laws of their resident country and also check whether Double Taxation Avoidance Agreement (DTAA) relief is available,” says CA (Dr.) Suresh Surana.

FCNR accounts can be opened jointly with other NRIs, and NRIs are also permitted to open joint accounts with resident close relatives on a former or survivor basis and a nomination facility is permitted.

Top Banks for USD FCNR Deposits: Comparing 5.2% Yields

IDBI Bank (effective from April 01, 2026)

For deposits up to $1 million, the USD rate for 1 year to less than 2 years is 4.55%. For 2 years to less than 3 years, it is 3.70%. For 3 years to less than 4 years, it is 3.25%. For 4 years to less than 5 years and for 5 years only, it is 3.15% each. For deposits above $1 million and up to $5 million, rates range from 4.65% (1–2 years) down to 3.20% (5 years).

South Indian Bank (effective from 7th April 2026)

1 year to less than 2 years: 4.10% up to and including Rs 5 lakh; 4.50% for deposits above Rs 5 lakh.
5 years: 3.90% for any amount of deposit

Bank of Maharashtra (effective from 18 November 2024)

For deposits of 12, 15, 18, and 21 months, the USD rate is 5.20% per annum. For deposits of 24, 27, 30, and 33 months, the rate drops to 3.10%. For 36, 39, 42, and 45 months, the rate remains at 3.10%. For 48, 51, 54, and 57 months, it is 3.00%, and for 60 months, it is also 3.00%

Indian Overseas Bank (effective from 15.03.2026)

For USD FCNR (B) deposits, the interest rate for 1 year to less than 2 years is 5.00% — the highest rate across all tenures. For 2 years to less than 3 years, the rate drops to 3.20%. For 3 years to less than 4 years, 4 years to less than 5 years, and for 5 years, the rate is 3.15%.

Tamilnad Mercantile Bank (effective from 7th April 2026)

The bank offers two rate slabs for USD FCNR (B) deposits, depending on the deposit amount. For deposits below $1 lakh, the rate for 1 year to less than 2 years is 5.10%. For 2 years to less than 3 years, it is 4.00%, for 3 years to less than 4 years it is 3.90%, for 4 years to less than 5 years it is 3.60%, and for 5 years only it is 3.50%.

For deposits of $1 lakh and above, the 1-year to less than 2-year rate is higher at 5.50%. For 2 years to less than 3 years, it is 4.15%. The rates for 3 years to less than 4 years, 4 years to less than 5 years, and 5 years only remain the same at 3.90%, 3.60%, and 3.50% respectively — identical to the lower slab.

RBL Bank (effective from April 1, 2026)

For USD FCNR (B) deposits, the rate for 1 year and above but less than 2 years is 4.85%. For 2 years and above but less than 3 years it is 4.25%. For 3 years and above but less than 4 years it is 4.25%. For 4 years and above but less than 5 years, it is 4.25%, and for 5 years only, it is 4.55% — the second-highest rate and notably higher than the 4-year slab.

Is the FCNR deposit for you?

If you are an NRI, PIO, or OCI looking to earn more interest on your foreign currency investments while avoiding exchange rate risk, an FCNR deposit may be a good option. It provides tax-free interest, complete repatriability of capital and interest. With a one-year minimum term and joint account choices available, it is a safe and convenient method to build your savings in overseas funds.

“Foreign Currency Non-Resident (FCNR) deposits are best suited for NRIs who earn and save in foreign currencies and want to protect their funds from exchange rate fluctuations. They are particularly ideal for professionals working in countries with stable currencies like the US, UK, or UAE, who may have future financial commitments in India but prefer to retain their savings in foreign currency terms,” says CA Ruchika Bhagat, MD, Neeraj Bhagat & Co.

However, a word of caution for those NRIs who come to India. “Once an NRI returns to India and becomes a resident, the tax-free status ceases, and interest becomes taxable. Timely conversion to resident accounts is essential to remain compliant,” adds Bhagat.

Disclaimer: The FCNR (B) deposit interest rates mentioned in this article are sourced directly from the respective banks’ official websites and are indicative only. These rates are subject to change at the banks’ discretion and, as per Reserve Bank of India (RBI) guidelines, are often updated monthly. The banks mentioned here do not represent an exhaustive or exclusive list — other banks in India may offer higher or more competitive rates on FCNR (B) deposits. This article is for informational purposes only and does not constitute financial advice, investment recommendation, or solicitation to invest. Readers are strongly advised to visit the official website of the respective bank, consult a qualified financial advisor, and independently verify the latest applicable rates before making any investment decision. The Financial Express is not responsible for any financial loss or liability arising from investment decisions made based on information published in this article.