NRI deposit rates 2026 have already come and gone for anyone who did not lock in before 31 August, when the Reserve Bank of India shut its special FCNR(B) dollar-deposit window a full month earlier than the 30 September deadline it had originally set.
The scheme launched on 8 June 2026, when the RBI temporarily lifted the interest-rate ceiling on fresh FCNR(B) deposits with three-to-five-year tenors and on NRE deposits of three years or longer, while separately absorbing the currency-hedging costs banks would normally pass on to depositors. That combination let banks offer NRIs dollar and other foreign-currency deposit rates well above what the RBI’s standard ceiling formula allows. HDFC Bank and ICICI Bank both reached 6.25 percent, Punjab National Bank went to 6.50 percent, and AU Small Finance Bank pushed a three-to-four-year deposit to 7.10 percent, rates NRI depositors had not seen since the 2013 taper-tantrum era.
The comparison to 2013 is not just colour. That earlier scheme, launched during the taper-tantrum currency crisis, raised close to 34 billion US dollars, 26 billion of it through FCNR(B) deposits and the rest through external commercial borrowings, on a 3.5 percent subsidy to banks that represented roughly 12 percent of India’s entire foreign-exchange reserves at the time.
Analysts going into the 2026 scheme expected considerably less, given higher prevailing US interest rates made the incentive less attractive, with early estimates of around 20 billion US dollars from FCNR(B) deposits alone and 40 to 50 billion US dollars combined with related measures. The actual FCNR(B) total, 127.2 billion US dollars, ran more than six times past that early estimate, which is the clearest evidence for why the RBI cut the window a month short rather than letting it run to 30 September as planned.
What was the RBI’s FCNR(B) rate relaxation, and why did it let banks pay so much more?
Banks normally cannot offer unlimited interest on FCNR(B) deposits. The RBI caps the rate at a fixed spread over a reference benchmark, and offering more than that spread would normally cost a bank money once it hedges the currency risk on converting incoming dollars to rupees. The June 2026 scheme temporarily removed that ceiling for the specified tenors and had the RBI itself absorb the hedging cost through a discounted swap facility, so a bank could offer a far higher headline rate without losing money on the currency side.Once the ceiling relaxation and the subsidised swap both expired together on 31 August, banks lost the economic basis for the higher rate at the same moment, which is why published FCNR rates fell everywhere within days rather than drifting down gradually.
Inflows ran well ahead of the RBI’s own expectations from the start. Business Standard reported foreign-exchange inflows of 56.85 billion US dollars by 13 August, of which 52.3 billion US dollars was FCNR(B) deposits alone, prompting the RBI to announce it would close the FCNR(B) portion of the scheme on 31 August rather than the original 30 September date, with banks given until 11 September to complete any swaps already under way.
The RBI’s own press release did not state a reason for the early close. An economist quoted by Business Standard offered the likely explanation: the central bank had already raised more foreign currency than it needed and saw little point in continuing to subsidise inflows past that point.
The pace only quickened once the early closure was announced. By 21 August, total inflows under the facility had already reached 72.85 billion US dollars, with FCNR(B) deposits making up 65.4 billion US dollars of that, roughly nine-tenths of the total, according to BusinessToday’s reporting at the time. That figure nearly doubled again in the ten days remaining before the window shut, a rush that suggests depositors and banks alike treated the announced closing date as a genuine deadline rather than a formality.
The final numbers, confirmed in the RBI’s own 2 September 2026 press release, show just how far inflows ran past that threshold. Total foreign-exchange inflows under the broader swap facility reached 136,377 million US dollars as of 31 August, provisional and subject to reconciliation. FCNR(B) deposits alone accounted for 127,226 million US dollars of that total, with Overseas Foreign Currency Borrowings contributing 5,260 million US dollars and External Commercial Borrowings a further 3,891 million US dollars.
Only the FCNR(B) deposit window has closed. The separate swap facility covering ECBs and OFCBs remains open until 31 December 2026, though that channel does not affect the NRI deposit rates most readers are asking about.
Rates have already fallen sharply as a direct result. According to BusinessToday’s reporting on the 1 September changes, HDFC Bank’s three-to-four-year FCNR rate dropped from 6.25 percent to 3.50 percent, and its four-to-five-year rate to 3.15 percent. SBI’s rates fell from 6.00 percent to a range of 2.95 to 3.35 percent depending on tenor. ICICI Bank went from 6.25 percent to a flat 3.25 percent, Punjab National Bank from 6.50 percent to 3.06 to 3.25 percent, Axis Bank from 6.25 percent to 2.95 to 3.25 percent,
Kotak Mahindra Bank went from 6.30 percent down to a 3.00 to 3.40 percent range. Every one of these cuts took effect on 1 September, the day after the scheme’s early close.
None of this touches deposits already opened before the window shut. An FCNR(B) or NRE deposit, like any fixed-term deposit, locks in its interest rate at the date it is opened, so anyone who moved money in before 31 August keeps their contracted rate, 6 to 7 percent in many cases, for the full length of that term regardless of what happens to the published rate afterward. The change only affects money not yet deposited.
What the NRI deposit rates 2026 crash means for money not yet deposited
What it means going forward is straightforward, if less exciting than the summer’s headlines. The FCNR(B) deposit relaxation is closed, the RBI has given no indication it intends to reopen or extend it, and the rates now on offer, roughly 3 to 3.5 percent at most major banks, are back in line with where FCNR deposits sat before June. Anyone weighing a new dollar deposit in India should check a bank’s currently published rate directly rather than relying on the 6 to 7 percent figures that circulated over the summer, since those numbers no longer apply to any deposit opened from 1 September onward.
What NRIs with money already in FCNR deposits are asking now
Did the rate on my existing FCNR deposit just drop too?
No. The rate cut only applies to deposits opened from 1 September 2026 onward. An FCNR(B) or NRE deposit locks in its rate on the day it is opened, so a deposit made during the special window keeps that higher rate until it matures, regardless of what banks are advertising now.
Is the special window completely gone, or could it reopen?
The FCNR(B) deposit portion closed on 31 August 2026 and the RBI has not announced any plan to reopen or extend it. A related but separate swap facility covering Overseas Foreign Currency Borrowings and External Commercial Borrowings remains open until 31 December 2026, but that channel does not change NRI deposit rates.
What rate can I actually get on a new FCNR deposit now?
Roughly half of what was available in August. Major banks are now publishing rates in the 3 to 3.5 percent range for three-to-five-year tenors, down from highs of 6 to 7.10 percent during the special window, though exact figures vary by bank and tenor and are worth checking directly before depositing.
