FCNR Deposit Rates 2026: Latest Bank Rates After RBI’s Special Window Closed
FCNR deposit rates fell from 1 September 2026 after RBI's swap window closed. Compare USD rates at SBI, HDFC Bank, ICICI Bank and Kotak, plus rules and tax.
FCNR deposit rates came down from 1 September 2026, after the Reserve Bank of India’s special swap window for these deposits closed on 31 August. On US dollar deposits, SBI, HDFC Bank, ICICI Bank and Kotak Mahindra Bank now publish rates between 2.95% and 4.40% a year, depending on the bank and tenure. While the window was open, Business Today reported that some banks offered as much as 6–6.5% on longer deposits.
This guide lists the latest published FCNR deposit rates, explains why they fell, and covers the rules, tax position and risks to check before you book an FCNR deposit.
Latest FCNR deposit rates for US dollar deposits
The table shows US dollar FCNR deposit rates published on each bank’s website, as checked on 14 September 2026. All rates are per year. SBI’s table is marked effective 15 July 2026, while the other three banks show rates effective 1 September 2026.
| Tenure | SBI | HDFC Bank | ICICI Bank | Kotak Mahindra Bank |
|---|---|---|---|---|
| 1 year to less than 2 years | 4.40% | 3.80% | 3.75% | 4.00% |
| 2 years to less than 3 years | 3.55% | 3.55% | 3.50% | 3.70% |
| 3 years to less than 4 years | 3.35% | 3.50% | 3.25% | 3.40% |
| 4 years to less than 5 years | 2.95% | 3.15% | 3.25% | 3.20% |
| 5 years | 3.05% | 3.15% | 3.25% | 3.00% |
Kotak shows the same US dollar rates for deposits below and above USD 0.5 million. Banks can change these rates at any time, so confirm the current rate on the bank’s website before you book.
What the rate table shows
- At all four banks, the one-to-two-year bucket pays more than the five-year bucket.
- SBI has the highest one-to-two-year US dollar rate of the four, at 4.40%.
- For three-to-four-year deposits, HDFC Bank’s 3.50% is the highest of the four.
- For five-year deposits, ICICI Bank’s 3.25% is the highest of the four.
FCNR deposit rates in other currencies
An FCNR deposit can also be booked in other foreign currencies, but each bank offers its own list. These are the published rates for the shortest tenure bucket at three of the banks.
| Currency | SBI (1 year) | HDFC Bank (1 to less than 2 years) | Kotak (1 to less than 2 years) |
|---|---|---|---|
| British pound (GBP) | 4.00% | 3.75% | 4.00% |
| Euro (EUR) | 3.00% | 2.15% | 2.55% |
| Australian dollar (AUD) | 4.25% | 4.15% | 4.35% |
| Canadian dollar (CAD) | 3.08% | 2.15% | Not listed |
| Japanese yen (JPY) | 0.65% | 0.80% | Not listed |
| Singapore dollar (SGD) | Not listed | 1.05% | 1.25% |
Rates on longer tenures in these currencies are often lower, and some tenures are not offered at all. Kotak shows “No Quote” for GBP, EUR and AUD deposits of four years and above. HDFC Bank lists JPY deposits only for one to less than two years.
ICICI Bank has also said that from 1 September 2026 it no longer offers FCNR deposits in Hong Kong dollars. Its existing HKD deposits will not be auto-renewed.
Why FCNR deposit rates fell in September 2026
The fall follows the end of a special RBI scheme that made long-term FCNR deposits unusually attractive for banks to raise.
The RBI swap window
RBI announced a facility of concessional swaps for fresh FCNR(B) deposits, overseas foreign currency borrowings and external commercial borrowings on 5 June 2026. The facility became operational on 8 June 2026. RBI’s FAQs describe it as a plain buy/sell foreign exchange swap covering only the principal of the deposits, not the interest. Eligible deposits needed a minimum original tenor of three years.
RBI also gave banks regulatory room. It temporarily withdrew the interest rate ceiling on fresh FCNR(B) deposits of three to five years from 17 June 2026. It also exempted fresh FCNR(B) deposits of three to five years, mobilised from 8 June 2026, from cash reserve ratio and statutory liquidity ratio requirements.
The early close
The window was first meant to run until 30 September 2026. As announced in RBI’s press release of 14 August 2026, it closed for FCNR(B) deposits on 31 August 2026. On 25 August, RBI also moved the end date of the rate ceiling relaxation and of the reserve exemptions to 31 August 2026.
The response was very large. RBI’s provisional data show FCNR(B) inflows of USD 1,27,226 million under the facility up to 31 August 2026, out of total inflows of USD 1,36,377 million. A Ministry of Finance release noted that RBI’s 2013 FCNR(B) swap scheme had raised about US$26 billion over roughly three months.
Business Today reported that several major banks, including HDFC Bank, ICICI Bank, SBI, Punjab National Bank, Axis Bank and Kotak Mahindra Bank, sharply reduced FCNR deposit rates from 1 September 2026. It linked the cuts to the end of the special hedging support for three-to-five-year FCNR deposits.
How RBI caps FCNR deposit rates now
With the temporary relaxation over, the ceilings in RBI’s November 2025 directions on interest rates on deposits apply again. Fixed-rate FCNR deposits are capped using the overnight Alternative Reference Rate (ARR) for the currency. Floating-rate deposits are capped using swap rates.
| Period of deposit | Ceiling rate |
|---|---|
| 1 year to less than 3 years | Overnight ARR for the currency or swap rate, plus 250 basis points. |
| 3 years up to and including 5 years | Overnight ARR for the currency or swap rate, plus 350 basis points. |
The ARR or swap rate on the last working day of the previous month sets the base for the ceiling in the following month. Rates published by Financial Benchmarks India Pvt Ltd are the reference. So the ceiling itself can move every month.
How an FCNR deposit works
An FCNR deposit is a term deposit held in a foreign currency with a bank in India. Business Today describes it as an account that lets NRIs, OCIs and PIOs hold fixed deposits in foreign currency. Only banks authorised by RBI under the Foreign Exchange Management Act, 1999 can accept these deposits.
- Tenure. RBI allows five tenure buckets, from one year up to five years. Banks cannot accept or renew FCNR(B) deposits for more than five years, and recurring deposits are not allowed.
- Interest calculation. Interest is calculated on a 360-day year. It is calculated and paid at intervals of 180 days, but the depositor can choose to receive it at maturity with compounding.
- Rate differences. A bank’s FCNR rates can vary only by tenor and by deposit size.
- Early withdrawal. If you withdraw before the one-year minimum period, no interest is paid. Penalties after that depend on each bank’s board-approved policy.
- Minimum amount. Banks set their own minimums. HDFC Bank, for example, lists USD 1,000, GBP 2,500 and EUR 2,500.
Early withdrawal terms at the four banks
- SBI. No interest is paid before one year. After one year there is no penalty, but interest is paid at the lowest of the contracted rate, the rate prevailing when the deposit was opened, or the current rate, for the period the deposit ran.
- HDFC Bank. No interest is paid within one year. After that, interest is paid at the applicable rate for the period the deposit ran, and the penalty is nil.
- ICICI Bank. Before 12 months, no interest is paid and no penalty is levied. After 12 months, interest is paid at the booking-date rate for the period the deposit ran, with no penalty.
- Kotak Mahindra Bank. Its rate page lists a premature withdrawal penalty of 0.25% on US dollar, GBP and AUD deposits, 0.10% on SGD, and 0.00% on EUR and JPY.
Deposits booked during the window
If you booked a three-to-five-year FCNR deposit between June and August 2026, check its lock-in terms. RBI’s FAQs say banks could keep offering regular deposits of that tenor outside the facility “without the requirement of a minimum lock-in period of one year”.
ICICI Bank, for instance, says deposits of 36 to 60 months booked from 11 June to 31 August 2026 have a 12-month lock-in. If such a deposit is withdrawn after the lock-in, it pays interest at the booking rate for the period the deposit ran, after deducting a 1% penalty.
Is FCNR deposit interest taxable?
The Income Tax Department’s list of benefits for non-residents shows interest paid by a scheduled bank on RBI-approved foreign currency deposits as exempt under section 10(15)(iv)(fa) of the Income-tax Act, 1961. The exemption is listed for non-residents, and for individuals or Hindu Undivided Families who are resident but not ordinarily resident.
HDFC Bank’s FCNR page also states that interest on its FCNR deposits is not taxable in India. Income earned from 1 April 2026 is governed by the Income-tax Act, 2025, so confirm the exact provision and your residential status with a tax adviser, especially if you are moving back to India.
If you move back to India
A bank may, at its discretion, let a returning NRI keep an FCNR deposit until maturity at the contracted rate. From the date of return, the deposit is treated as a resident deposit. At maturity, it is converted into a resident rupee account or, if you are eligible, a Resident Foreign Currency (RFC) account. No penalty applies to premature conversion of FCNR balances into an RFC account on your return.
FCNR deposit or NRE deposit?
Both are widely used by NRIs, but they work differently.
| Feature | FCNR deposit | NRE deposit |
|---|---|---|
| Currency. | Held in a foreign currency. | Held in Indian rupees. |
| Exchange rate effect. | The deposit stays in foreign currency, so rupee moves do not change its foreign currency value. | The deposit is in rupees, so its value in foreign currency moves with the exchange rate. |
| Tax exemption listed by the Income Tax Department. | Section 10(15)(iv)(fa) of the 1961 Act. | Section 10(4)(ii) of the 1961 Act. |
RBI’s temporary relaxation of the rate restriction on NRE deposits of three years and above also ended on 31 August 2026. So compare the current published rates for both products on the same day before you decide.
Is an FCNR deposit safe?
The Deposit Insurance and Credit Guarantee Corporation (DICGC) insures all bank deposits except a few listed categories. These include deposits of foreign governments, deposits of central and state governments, inter-bank deposits and deposits received outside India. Its guide shows deposits in one bank insured up to ₹5,00,000 per depositor.
An FCNR deposit placed with a bank in India is not among those listed exclusions. But any amount above the insured limit is not covered, so for a large deposit the financial strength of the bank matters.
How to choose an FCNR deposit
- Pick the currency you are likely to need, because converting between currencies usually involves exchange costs.
- Compare rates for the same tenure bucket, since banks price each bucket separately.
- Check the effective date on the bank’s rate table, because rates and ceilings can change monthly.
- Read the premature withdrawal terms, including any penalty or lock-in.
- Decide whether you want interest paid every 180 days or compounded until maturity.
- Keep the deposit insurance limit in mind if you are placing a large amount with one bank.
The bottom line
FCNR deposit rates have come down since RBI’s special window ended on 31 August 2026. For US dollar deposits, the four large banks checked here publish rates from 2.95% to 4.40%, and at each bank the one-to-two-year bucket pays the most. Compare the same tenure across banks, check the withdrawal terms, and confirm the rate on the bank’s website on the day you book.
Frequently asked questions
What are the latest FCNR deposit rates in September 2026?
For US dollar deposits of one to less than two years, SBI publishes 4.40%, Kotak Mahindra Bank 4.00%, HDFC Bank 3.80% and ICICI Bank 3.75%. For five-year deposits, the same banks publish 3.05%, 3.00%, 3.15% and 3.25% respectively. SBI’s rates are marked effective 15 July 2026, and the others 1 September 2026.
Why did FCNR deposit rates fall from 1 September 2026?
RBI’s special swap facility for fresh FCNR(B) deposits closed on 31 August 2026, a month earlier than first planned. The temporary withdrawal of the rate ceiling on three-to-five-year deposits also ended then, and Business Today reported that major banks cut FCNR deposit rates from 1 September.
Is FCNR deposit interest tax-free?
The Income Tax Department lists the exemption under section 10(15)(iv)(fa) of the Income-tax Act, 1961, for non-residents and for individuals or HUFs who are resident but not ordinarily resident. Income earned from 1 April 2026 is governed by the Income-tax Act, 2025, so confirm your position with a tax adviser.
What happens if I withdraw an FCNR deposit before one year?
No interest is paid if you withdraw before the one-year minimum period. After one year, the interest and penalty terms depend on the bank. HDFC Bank, for example, lists a nil penalty, while Kotak lists 0.25% on US dollar deposits.
What is the maximum tenure of an FCNR deposit?
Five years. RBI does not allow banks to accept or renew FCNR(B) deposits for more than five years, and recurring deposits are not allowed under the scheme.
How often do FCNR deposit rates change?
Banks can revise their rates at any time. RBI’s ceilings are also reset every month, using the overnight ARR or swap rate on the last working day of the previous month.
Can I keep my FCNR deposit if I return to India?
A bank may, at its discretion, allow the deposit to continue until maturity at the contracted rate. It is treated as a resident deposit from your date of return and converted into a resident rupee account or an eligible RFC account at maturity.
Is an FCNR deposit covered by deposit insurance?
DICGC insures all bank deposits except listed categories, such as deposits of foreign governments, inter-bank deposits and deposits received outside India. Its guide shows cover of up to ₹5,00,000 per depositor in a bank.
Sources
- RBI press release on forex inflows under the swap facility, 2 September 2026.
- RBI (Commercial Banks – Interest Rate on Deposits) Third Amendment Directions, 2026.
- RBI FAQs on the swap facility for FCNR(B) deposits.
- Ministry of Finance (PIB) release on the swap facility, 24 August 2026.
- SBI FCNR deposit interest rates.
- HDFC Bank FCNR deposit rates.
- ICICI Bank FCNR (B) deposit rates.
- Kotak Mahindra Bank FCNR deposit interest rates.
- DICGC: A guide to deposit insurance.
Rates were taken from each bank’s website on 14 September 2026 and can change without notice. This article is for information only and is not investment or tax advice.
Sources & references
- Reserve Bank of India — RBI
- Income Tax Department — Income Tax Department
- Reserve Bank of India — RBI press release on forex inflows under the swap facility, 2 September 2026
- Reserve Bank of India — RBI (Commercial Banks – Interest Rate on Deposits) Third Amendment Directions, 2026
- Reserve Bank of India — RBI FAQs on the swap facility for FCNR(B) deposits
- Press Information Bureau — Ministry of Finance (PIB) release on the swap facility, 24 August 2026
Bhavik Vaid
Bhavik Vaid writes on Indian markets, taxation, banking and personal finance for CADialogue. He covers RBI policy, GST and income-tax changes, mutual funds and market moves, translating them into practical guidance for retail investors, salaried professionals and business owners in India.
