HDFC Bank hikes FCNR deposit rates: How it affects you?

HDFC Bank hikes FCNR deposit rates: How it affects you?

HDFC Bank has announced a major hike in the interest rates for its Foreign Currency Non-Resident (FCNR) deposits.

The bank will now offer an interest rate of 6% for tenures ranging from three to five years and above, according to its latest rate card effective from today.

This is a massive jump from the earlier rate of 3.65%, a difference of as much as 235 basis points.

RBI introduces concessional swap window to boost inflows

At the June 2026 Monetary Policy Committee (MPC) meeting, the Reserve Bank of India (RBI) noted a sharp fall in FCNR(B) inflows.

These have plummeted from over $7 billion in FY25 to just $946 million in FY26.

To counter this trend, the RBI introduced a concessional swap window till September 30, 2026, covering full hedging costs for banks attracting new 3-5 year FCNR(B) deposits.

What are FCNR deposits?

FCNR(B) deposits are fixed deposit accounts that allow non-resident Indians (NRIs) to park their money in foreign currencies with Indian banks.

Unlike NRE deposits, these accounts are maintained in specific currencies like the US dollar, pound sterling, euro and Japanese yen among others.

They are ideal for NRIs and Overseas Citizens of India (OCIs) whose future liabilities and capital needs are in a foreign currency.

Benefits of FCNR deposits

The FCNR(B) deposits offer a completely risk-free, sovereign-backed dollar (or other forex) return without the risk of INR depreciation.

It also provides an efficient way to park foreign earnings in India while avoiding exchange rate fluctuations that reduce NRE returns.

The interest income is tax-free if the individual is a "person resident outside India" as defined by FEMA or is classified as a "Resident but Not Ordinarily Resident" (RNOR) under Indian tax laws.