The Reserve Bank of India (RBI) launched a special swap facility on 5 June to encourage non‑resident Indians (NRIs) to put more money into foreign‑currency deposits. By 31 July 2026, banks had gathered $36.73 bn in new FCNR(B) deposits through this window, adding to a total of $40.82 bn in foreign‑exchange inflows.
In response to the RBI’s initiative, HDFC Bank and ICICI Bank have increased the interest rate on US dollar‑denominated FCNR(B) deposits for the 3‑ to 5‑year period. Starting 1 August 2026, the rate will rise to 6.25%, up from the previous 6%.
For shorter terms, the banks keep the rates lower. HDFC offers 3.5% for deposits between one year and less than two years, and 3.25% for those between two years and less than three years. ICICI Bank follows the same structure.
The swap facility, which began operating on 8 June, remains open until 30 September 2026. It allows banks to offer higher returns to NRIs while keeping hedging costs manageable.
RBI noted a sharp slowdown in FCNR(B) inflows from FY25 to FY26, with net inflows falling from over $7 bn to just $946 m. This decline prompted the central bank to introduce measures to revive overseas deposit mobilisation.
FCNR(B) deposits let NRIs keep fixed deposits in foreign currencies, such as the US dollar, and protect them from exchange‑rate risk because both principal and interest are paid in the same currency.
By raising rates, HDFC and ICICI aim to capture more overseas funds under the RBI’s temporary support. The higher returns should attract more NRI investors.
These moves are expected to strengthen India’s foreign‑exchange reserves and boost overseas capital inflows, helping the country’s balance of payments.