HDFC Bank and ICICI Bank Raise FCNR(B) Deposit Rates Following Government Hedging Cost Relaxation

After the government relaxed the hedging cost on select FCNR (B) deposits, many banks are passing this advantage to its customers by increasing Foreign Currency Non-Resident (Bank)-FCNR (B)- fixed deposit (FD) interest rates.

HDFC Bank and ICICI Bank have also increased FCNR (B) deposit rates by 25 basis points (0.25%) each on select USD FCNR (B) deposit tenures. The applicable interest rate depends on the deposit amount and tenure.

One of the key advantages of FCNR (B) fixed deposits is that the interest earned is tax-free in India. Before investing, Non-Resident Indians (NRIs) looking to park their foreign currency savings in India should compare the latest FCNR (B) deposit rates offered by different banks.

In June 2026, the RBI announced that the government would bear the hedging cost on 3-5-year FCNR (B) deposits. As a result, many banks increased interest rates on the same tenures. The relaxation on the hedging cost will remain in force until September 30, 2026.

Here's a comparison of the latest FCNR (B) deposit rates offered by HDFC Bank and ICICI Bank, along with the key rules on FCNR(B) premature withdrawal.

HDFC Bank FCNR (B) interest rates

HDFC Bank has increased FCNR (B) deposit rates by 25 basis points, from 6% to 6.25%, on tenures from 3 years to 5 years effective August 1, 2026.

Period USD Effective Date 1 Year- less than 2 years 3.50% 1-Aug-26 2 years - less than 3 years 3.25% 1-Aug-26 3 year to less than 4 years 6.25% 1-Aug-26 4 years to less than 5 years 6.25% 1-Aug-26 5 years only 6.25% 1-Aug-26

HDFC Bank’s FCNR(B) deposit lock-in details

According to the HDFC Bank website, “Foreign Currency Non Resident (FCNR) deposits booked for 3 to 5 years tenure will have a lock-in period of 1 year. This will be applicable to deposits booked between June 10, 2026, to September 30, 2026.”

Premature withdrawal rules for FCNR (B) deposits

No interest will be paid if the FCNR (B) deposit is prematurely withdrawn before 1 year. No penalty will be levied on the premature closure of FCNR (B) fixed deposit.

With effect from July 22, 2023, the interest rate applicable for premature withdrawal including partial withdrawal on FCNR (B) deposits will be the rate on the date of deposit booked for the period for which deposit remained with the bank and not at the contracted rate, HDFC Bank says.

ICICI Bank FCNR (B) deposits interest rates

ICICI Bank has increased FCNR (B) deposit rates by 25 basis points from 6% to 6.25% on a tenure from 3 years to 5 years for deposits above USD 4 million effective August 3, 2026.

Tenure USD < 400000 USD >= 400000 12 months to < 24 months 3.85% 3.85% >= 24 months to < 36 months 3.85% 3.85% >= 36 months to < 48 months 6.00% 6.25% >= 48 months to < 60 months 6.00% 6.25% 60 months 6.00% 6.25%

ICICI Bank’s premature withdrawal rules for FCNR (B) deposits

For ICICI Bank FCNR (B) deposit with original tenor of 12 months to < 36 months:

Before completion of 12 months: No interest will be payable and no penalty will be levied.

After completion of 12 months: On premature withdrawal of the deposit, interest shall be paid at the rate applicable, on the date of deposit booking, for the amount and period for which, the deposit remained with the bank and no penalty will be levied.

Why FCNR (B) and NRE deposits remain popular among NRIs

FCNR (B) deposits remain a popular choice for NRIs looking to increase their overseas earnings while reducing foreign exchange risk. FCNR (B) deposits are available in US dollars and other currencies such as British Pound, Euro, offering a full repatriation of principal and interest. It also provides tax benefits on earnings from interest in India. Similarly, NRE FDs offer NRIs an attractive rupee-denominated savings option with a full repatriation and tax-free interest income in India, subject to applicable laws.

RBI data for FCNR(B) and other foreign inflows based on the data received from authorised dealer banks, the position of forex inflows mobilised till July 31, 2026, as per the RBI, is as follows:

Type Amount (USD million) FCNR(B) Deposits 36,725 OFCBs 2,575 ECBs 1,516 Total 40,816