New RBI Scheme Offers Attractive Interest Rates for NRI Dollar Deposits

Overview of the New RBI Initiative

For non-resident Indians (NRIs) holding dollar savings in US bank accounts, the Reserve Bank of India (RBI) has introduced a significant opportunity. Over the next three months, Indian banks are expected to provide interest rates ranging from 5.5% to 7% per annum on dollar fixed deposits through the Foreign Currency Non-Resident (FCNR(B)) scheme. This initiative is effective immediately and will be available until October 16, 2026, for deposits made by September 30.

According to the detailed guidelines released by the RBI, banks are permitted to accept deposits in any freely convertible currency, although the swap facility will be exclusively in US dollars. These deposits will have a one-year lock-in period, and the swap facility with the RBI cannot be revoked. Additionally, existing limitations on banks offering non-fund based facilities for redemption or repayment of funds will not apply to these deposits.

The ongoing geopolitical tensions in West Asia have resulted in a more than 50% increase in oil prices since the conflict began, contributing to a persistent decline in the value of the rupee. India's foreign exchange reserves have decreased to approximately $682 billion, down from $728 billion in February. NRI dollar deposit inflows, which were $7 billion in FY25, have dramatically fallen to under $1 billion in FY26.

The last time the RBI launched a similar scheme was in 2013 during a currency crisis, which saw then-Governor Raghuram Rajan implement measures that attracted around $34 billion from the NRI community within weeks, stabilizing the rupee and boosting RBI's reserves. Global brokerage firm Jefferies anticipates that the RBI’s FCNR-B initiative could draw in $50-70 billion, highlighting the appeal of leveraging under the new framework.