Up to 6% on a USD fixed deposit, tax-free, fully repatriable, with no rupee risk. That is what the Reserve Bank of India’s special rate window, open until 30 September 2026, is offering NRIs on FCNR(B) deposits at HDFC Bank, ICICI Bank and Axis Bank. AU Small Finance Bank has pushed it further, to 7.10% on a three-to-four-year USD deposit.
The rates are real. The window is genuinely open. And for NRIs in Australia, the UK, the UAE, the US, Canada and New Zealand deciding where to park foreign earnings, the numbers matter.
But here is what the rate tables do not tell you: the account you are eligible for is not a choice based on which rate is best. It is determined, under FEMA and RBI rules, by where the money originates. Getting this wrong is not just inefficient. It is a compliance breach.
The three accounts, in plain terms
What are NRE, NRO and FCNR(B) accounts?
All three are Indian bank accounts available to Non-Resident Indians, Persons of Indian Origin and OCI cardholders. They differ on three dimensions: what currency they hold, what money can be credited to them, and how the interest is taxed. NRE and NRO accounts hold Indian rupees. FCNR(B) accounts hold foreign currency, removing exchange-rate risk entirely. The RBI governs all three under the Foreign Exchange Management Act (FEMA).
NRE (Non-Resident External): Holds Indian rupees. Foreign currency is converted to INR on deposit. Interest is fully exempt from Indian income tax. Principal and interest are fully and freely repatriable with no cap. Can only be funded from foreign earnings or transfers from other NRE or FCNR accounts. Available as savings accounts, fixed deposits and recurring deposits.
NRO (Non-Resident Ordinary): Also holds Indian rupees. This is the account for India-sourced income: rent from a property in Chennai, dividends from Indian shares, a pension, interest from pre-existing Indian savings. Interest is taxable in India at approximately 31.2% TDS (30% plus surcharge plus 4% health and education cess). Repatriation is capped at USD 1 million per financial year, after tax, with Form 15CA and Form 15CB documentation. When you become an NRI, your existing resident savings account must be re-designated as an NRO account. It cannot become an NRE account.
FCNR(B) (Foreign Currency Non-Resident Bank): A fixed deposit held in foreign currency. The deposit is made in, and repaid in, the same foreign currency, so there is no rupee exposure at any point. Interest is fully exempt from Indian income tax. Principal and interest are fully repatriable. Minimum tenor is one year, maximum is five years. Available in USD, GBP, EUR, AUD, CAD and JPY, varying by bank.
What the rate window means right now
The RBI removed interest-rate ceilings on fresh FCNR(B) deposits of three to five year tenors, and on NRE deposits of three years and above, effective 17 June 2026 and running until 30 September 2026. Deposits booked under the window carry a one-year lock-in. Banks also benefit from a special swap facility with the RBI, which absorbs part of the hedging cost.
The result is the highest USD FCNR rates since the 2013 balance-of-payments crisis, when India last ran a similar scheme and raised approximately USD 34 billion.
| Bank | NRE FD (3–5yr, INR) | FCNR USD (3–5yr) | FCNR GBP (1yr) | FCNR AUD (1yr) | Rate effective |
|---|---|---|---|---|---|
| SBI (standard) | 6.30% | 5.25%–6.00% | 4.00% | 4.25% | 15 June 2026 |
| HDFC Bank | Up to 6.60% | 6.00% | On request | On request | June 2026 |
| ICICI Bank | Up to ~7.25% | 6.00% | Confirm at bank | Confirm at bank | June 2026 |
| Axis Bank | Up to 6.45% | Verify live | Verify live | Verify live | Verify before acting |
| Kotak Mahindra | Up to ~6.70% | Verify live | Verify live | Verify live | Verify before acting |
| AU Small Finance Bank | N/A | 7.10% (3–4yr) | N/A | N/A | June 2026 |
SBI and HDFC Bank NRE and FCNR rates are confirmed against each bank’s official published grid. ICICI Bank’s 6.00% USD FCNR rate is confirmed from its own FCNR article. Axis Bank, Kotak Mahindra and AUD/GBP sub-tenors should be re-verified on each bank’s live rate page before acting. All window rates carry a one-year lock-in, and the window closes 30 September 2026. Rates were accurate at publication.
One point worth stating plainly: despite the attractive rates, RBI data shows net FCNR(B) inflows in FY2025-26 fell to USD 946 million, down 86% from the previous year. The US-India rate differential is narrower than it was in 2013, and total NRI deposit inflows fell to USD 14.41 billion in FY26 from USD 16.16 billion in FY25. The window is open, but NRIs are not rushing in at the 2013 scale.
The tax difference is the real story
The headline rate on an NRO fixed deposit looks similar to an NRE deposit at the same bank. The TDS that arrives before the interest does is not.
Interest on an NRE fixed deposit: zero TDS, zero Indian income tax.
Interest on an NRO fixed deposit: approximately 31.2% deducted at source before you see a rupee.
That gap can be narrowed, but not eliminated, through India’s Double Taxation Avoidance Agreements. To access DTAA relief on NRO interest, you need a Tax Residency Certificate from your country of residence, a Form 10F filed on the Indian income-tax portal, and a no-permanent-establishment declaration. The treaty rates for NRI Affairs’ core audience:
| Country | DTAA cap on NRO interest (individual NRI) |
|---|---|
| Australia | 15% |
| United Kingdom | 15% |
| United States | 15% |
| UAE | 12.5% |
| Canada | 15% |
| New Zealand | 10% |
These rates apply in “all other cases.” The lower sub-rates of 5% to 10% that appear in most treaty texts apply only where the lender is a bank or financial institution, not an individual depositor.
One caveat that applies globally: NRE and FCNR interest is exempt from Indian tax but may still be taxable in your country of residence. An NRI in the US must report this interest to the IRS. An NRI in Australia must declare it to the ATO. Consult a cross-border tax adviser for your specific situation.
Which account does your money actually belong in
The decision is not about rate optimisation. It is about where the money comes from.
Foreign earnings go into NRE or FCNR. Salary transferred from your Australian employer, your UK income, your US consulting fees: these belong in NRE (if you want rupees) or FCNR (if you want to hold the currency and remove rupee risk). Tax-free. Fully repatriable. No cap.
Indian income must go into NRO. Rent from a flat in Mumbai, dividends from Indian equities, a pension from a former Indian employer: these can only be credited to an NRO account. Crediting Indian income to an NRE account is a FEMA violation. The TDS is the cost of having Indian income.
Choose FCNR when you want to eliminate currency risk. If you believe the rupee will depreciate over the deposit term, an NRE FD at 6.30% loses value in your home currency each year the rupee falls. An FCNR deposit at 6.00% in USD holds its value in dollars. The FCNR rate does not need to exceed the NRE rate to win on a total-return basis if the exchange rate moves against you.
Most NRIs run NRE and NRO simultaneously. The two accounts serve non-overlapping purposes. You cannot consolidate them without violating the source-of-funds rules. Adding FCNR is a tactical decision, most useful during rate windows like the current one and for those with large foreign-currency holdings they want to protect.
Still Have Questions?
Can I transfer from my NRO account to my NRE account?
Yes, since May 2012, the RBI permits NRO-to-NRE transfers. The transfer counts against the USD 1 million annual repatriation cap from the NRO account and requires Form 15CA and Form 15CB. After transfer, the funds in the NRE account are treated as fully repatriable.
Does the senior-citizen interest premium apply to NRE and NRO deposits?
No. The additional 0.50% interest rate offered by most Indian banks to senior citizens applies only to domestic resident deposits, not to NRE, NRO or FCNR accounts.
Can I open an NRE or FCNR account jointly with my spouse who is a resident Indian?
Yes, on a “Former or Survivor” basis. The NRI is the primary (“Former”) account holder. The resident spouse can operate the account only after the NRI account holder’s death, or via a specific Power of Attorney for limited local payments. The resident cannot independently operate the account during the NRI’s lifetime without such authorisation.
What happens to my NRE or FCNR account when I return to India permanently?
On return to India for permanent settlement, NRE and FCNR accounts must be re-designated as Resident Foreign Currency (RFC) accounts or converted to regular resident accounts. The RFC account allows you to hold foreign currency even as a resident. Consult your bank on the re-designation process and timing.
Is the 30 September 2026 window deadline the date to open the deposit or the date it must mature?
It is the date by which the fresh FCNR(B) deposit must be booked. Maturity can extend beyond 30 September 2026. Deposits booked before the deadline at the elevated rates retain those rates for the full tenor, subject to the one-year lock-in condition.
How to use this
This article is for informational purposes only and does not constitute financial or investment advice. Interest rates were accurate at the time of publication and should be verified directly with your bank before acting. Tax treatment depends on individual circumstances, applicable DTAA provisions and your country of residence. Consult a registered tax adviser or financial planner with cross-border expertise. For FEMA compliance and repatriation documentation, consult a chartered accountant or the Reserve Bank of India’s official guidelines at rbi.org.in.
