AU Small Finance Bank hikes FCNR(B), NRE FD rates; here's what NRIs need to know

The rate revision comes after the RBI, in June 2026, allowed banks greater flexibility to offer competitive rates on FCNR(B) deposits under a special swap window aimed at attracting foreign currency inflows from non-resident Indians (NRIs).

What are FCNR(B) deposits?

Foreign Currency Non-Resident (Bank), or FCNR(B), deposits are fixed deposits that allow NRIs to park their money in designated foreign currencies instead of Indian rupees. These accounts are available to NRIs, Overseas Citizens of India (OCIs) and Persons of Indian Origin (PIOs).

Deposits can be opened in major foreign currencies, including the US dollar (USD), British pound (GBP), Euro (EUR), Japanese yen (JPY), Australian dollar (AUD), Canadian dollar (CAD), Singapore dollar (SGD) and Swiss franc (CHF).

Unlike NRE fixed deposits, which are maintained in Indian rupees, FCNR(B) deposits are denominated in foreign currencies, protecting depositors from exchange rate fluctuations between the deposit currency and the rupee. Both the principal and interest are fully repatriable, subject to RBI regulations.

Banks compete for NRI deposits

AU Small Finance Bank’s move reflects the heightened competition among banks for NRI deposits following the RBI’s June measures.

State Bank of India currently offers up to 6% on FCNR(B) deposits in US dollars for maturities of three to five years, with slightly higher rates for deposits above USD 1 million. RBL Bank has also revised its FCNR(B) rates, offering up to 6.35% on five-year US dollar deposits, while providing differentiated rates across currencies and maturities.

In comparison, AU Small Finance Bank’s 7.40% peak FCNR(B) rate is among the highest currently available in the banking sector.

Alongside the rate revision, AU Small Finance Bank said eligible customers will continue to receive zero forex margin and zero bank charges on qualifying inward and outward remittances. Currency conversion will be offered at the bank’s interbank reference rate.

FCNR(B) deposit rates: How AU Small Finance Bank compares with peers

Note: Rates shown are for USD-denominated FCNR(B) deposits and represent the highest applicable rates offered by each bank. Other currencies and deposit tenures carry different interest rates.

Source: AU Small Finance Bank, SBI, RBL Bank websites (latest FCNR(B) interest rate schedules).

RBI measures boost inflows

The RBI’s strategy appears to be yielding results. According to RBI data, foreign currency inflows mobilised under the special swap facility reached $20.718 billion as of July 17, 2026. This included $17.406 billion through FCNR(B) deposits, $1.970 billion via Overseas Foreign Currency Borrowings (OFCBs) and $1.342 billion through External Commercial Borrowings (ECBs).

The strong mobilisation has also prompted SBI Research to project FCNR(B) inflows of $65-70 billion by the end of the scheme, underscoring the growing appeal of these deposits among NRIs.

For NRIs looking to earn higher returns while avoiding currency risk, FCNR(B) deposits have once again emerged as an attractive savings option, particularly as banks continue to raise interest rates in response to the RBI’s policy measures.