The government confirmed it would bear hedging costs on 3- to 5-year FCNR(B) deposits until September 30, 2026, a move that has given banks leeway to offer higher rates to NRIs, OCIs and POIs. As a result, several lenders are advertising FCNR(B) interest rates that surpass the 6% mark, with a number of offers reaching as high as 7.50% on specific tenures. The highest rates are concentrated on USD deposits and on longer 3- to 5-year tenures, though several banks present 6.25% or more on related periods.

An FCNR(B) account allows foreign currency deposits by NRIs, OCIs and POIs, with benefits including tax-free interest, easy fund repatriation and protection against exchange rate fluctuations. Investors can place funds in currencies such as the US dollar, Australian dollar, Canadian dollar, euro, British pound and Japanese yen. Most banks currently publish their best FCNR(B) FD rates for USD deposits.

Key details

Key rate points from several banks include:

  • Ujjivan Small Finance Bank offers 7.50% on 3- to 5-year USD deposits, with a lock-in period of one year for deposits booked June 12, 2026, through September 30, 2026; premature closure is not permitted during this period.
  • ESAF Small Finance Bank lists 7.50% on 5-year FCNR(B) deposits for amounts below USD 500,000, with rates placed into effect on June 30, 2026.
  • AU Small Finance Bank posts 7.40% on USD-denominated FCNR(B) deposits for a range of 3 to less than 4 years, effective July 27, 2026.
  • HDFC Bank’s upper tier sits at 6.25% on FCNR(B) deposits from three to five years, valid from August 1, 2026.
  • ICICI Bank also offers 6.25% on FCNR(B) deposits for three to five years, effective from August 4, 2026.
  • Ujjivan Small Finance Bank leads the pack with 7.50% on 3- to 5-year USD FCNR(B) deposits in the 2026 window for eligible amounts.
  • Bank of Baroda lists a top rate of 6.50% on 4- to 5-year FCNR(B) deposits, applicable from July 13, 2026.

What it means

What this means for investors is a broader choice set for FCNR(B) placements, with several banks offering significantly higher yields on USD-based drafts in the 3- to 5-year window. The government-backed hedging cost relief provides banks with more room to pursue higher returns for NRIs, OCIs and POIs.

Next verified developments will likely involve updated rate sheets as banks respond to ongoing hedging cost policies and market demand, along with any shifts in policy timing beyond September 2026.