Several major Indian banks have increased interest rates on deposits targeted at Non-Resident Indians (NRIs) after the Reserve Bank of India (RBI) announced measures to encourage foreign currency inflows into the country.
Leading lenders including ICICI Bank, Axis Bank and Bank of Baroda have raised rates on Foreign Currency Non-Resident [FCNR(B)] deposits, with some offering returns of up to 6% on select tenures. Certain banks are also providing more than 7% interest on Non-Resident External (NRE) rupee deposits.
The move follows a recent RBI decision to temporarily relax regulations on foreign currency deposits. The central bank has exempted incremental FCNR(B) and NRE deposits from cash reserve ratio (CRR) and statutory liquidity ratio (SLR) requirements until November 2027. This reduces the cost of mobilising such deposits for banks and allows them to offer higher interest rates to customers.
Bankers say the revised rates are aimed at attracting fresh deposits from Indians living abroad at a time when global economic uncertainty and changing interest rate cycles are influencing investment decisions. The higher returns are expected to make Indian deposits more attractive compared to some international savings products.
FCNR(B) deposits allow NRIs to maintain fixed deposits in foreign currencies such as US dollars, British pounds and euros, while NRE deposits are maintained in Indian rupees. Both categories are popular among overseas Indians seeking secure investment options and easy repatriation of funds.
The RBI’s measures could help strengthen India’s foreign exchange reserves by encouraging greater inflows from the Indian diaspora. Increased foreign currency deposits can also improve liquidity in the banking system and support the country’s external financing position.
Banks are expected to continue reviewing deposit rates based on market conditions and demand. Financial institutions hope the enhanced rates, combined with regulatory incentives, will attract significant fresh deposits from NRIs over the coming months.
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