PNB increases dollar deposit rates to 6.1%; Here's what other banks are offering

Punjab National Bank (PNB) has raised interest rates on its Foreign Currency Non-Resident (Bank), or FCNR(B), dollar deposits, offering returns of up to 6.1% per annum for non-resident Indians (NRIs), Overseas Citizens of India (OCIs) and Persons of Indian Origin (POIs).

The revised rates, effective June 11, 2026, come amid a broader trend of banks increasing returns on foreign currency deposits following the Reserve Bank of India’s decision to provide government support for hedging costs on new 3-5 year FCNR(B) deposits until September 30, 2026.

PNB offers up to 6.1% on five-year dollar deposits

Under the revised structure, PNB is offering 6% interest on dollar deposits with maturities of three years to less than four years, 6.05% on deposits with tenures of four years to less than five years, and 6.1% on five-year deposits.

The increase marks a sharp jump from earlier rates. The bank had previously offered 3.24% on three- to four-year deposits, 2.95% on four- to five-year deposits and 3.05% on five-year deposits.

For deposits of $1 million and above, the bank said preferential rates may be offered on a negotiated basis.

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What is an FCNR(B) account?

An FCNR(B) account allows NRIs, OCIs and POIs to maintain fixed deposits in designated foreign currencies such as the US dollar, pound sterling, euro, Australian dollar, Canadian dollar and Japanese yen.

These deposits offer tax-free interest income, easy repatriation of funds and protection against exchange rate fluctuations, making them an attractive option for overseas Indians seeking to earn returns in India without taking currency conversion risk.

Banks raise rates to attract foreign currency inflows

PNB’s move comes as several lenders step up competition for stable NRI foreign currency inflows.

Axis Bank has revised its FCNR(B) rates to offer 6% on dollar deposits in the three- to five-year segment for both deposits below and above $1 million. The revised rates are effective June 11.

ICICI Bank has also raised rates, offering 6% on deposits with maturities ranging from 36 months to 60 months.

Among small finance banks, Equitas Small Finance Bank is offering the highest rate of 7.13% on dollar deposits with tenures between 36 months and 60 months. The rates apply to deposits below and above $500,000.

AU Small Finance Bank has increased rates to 7.1% for deposits with maturities of three years to less than four years, while offering 7% on deposits in the four- and five-year categories.

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Why banks are raising FCNR rates

Bankers say the recent upward revision in FCNR(B) rates reflects efforts to attract foreign currency deposits from NRIs and strengthen funding stability.

The RBI’s decision to bear hedging costs for fresh 3-5 year FCNR(B) deposits has further encouraged banks to offer higher returns and compete aggressively for overseas deposits.

The latest revisions have pushed dollar deposit rates into the 6%-7% range across several lenders, providing NRIs with an opportunity to earn higher tax-efficient returns while insulating their savings from exchange rate volatility.

With banks intensifying their efforts to mobilise foreign currency deposits, NRIs may find the current environment favourable for locking in attractive long-term rates on dollar-denominated savings.

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