Indian Banks Hike FCNR Deposit Rates to Lure NRI Capital

A scramble for foreign currency has gripped the Indian banking sector as institutions aggressively raise interest rates on FCNR(B) deposits. By targeting Non-Resident Indians with higher yields, lenders aim to bolster US dollar reserves following the latest policy directives from the Reserve Bank of India to stimulate capital inflows.

Editorial·June 12, 2026·reads: 3,096

Indian Banks Hike FCNR Deposit Rates to Lure NRI Capital

UCO Bank has pushed its five-year deposit rate to 7.20%, while DCB Bank is offering 7.13% for three- and five-year terms. These figures represent a deliberate shift in strategy for both public and private sector lenders, including major players like ICICI and Punjab National Bank. The industry-wide push is designed to capitalize on the current regulatory climate to secure stable foreign exchange.

Financial analysts estimate that these competitive adjustments could attract between USD 35 billion and USD 70 billion in new inflows. As banks refine their offerings, the strategy underscores a broader effort to stabilize currency flows through private investment rather than relying solely on traditional market mechanisms.