NRIs Eyeing High Returns? Ujjivan and DBS Revise FCNR(B) Deposit Rates

As the Reserve Bank of India (RBI) pushes for increased foreign currency inflows, Indian banks are aggressively competing to attract Non-Resident Indian (NRI) capital. Leading lenders are now offering enhanced interest rates on Foreign Currency Non-Resident (Bank) [FCNR(B)] deposits to capitalize on this growing demand.

Ujjivan SFB Leads with 7.5% Interest on USD Deposits

In a significant move to capture the NRI segment, Ujjivan Small Finance Bank has surged ahead of the competition by raising its interest rates. The bank has increased the rate on USD FCNR(B) deposits for the 3-5 year tenure to 7.50% per annum.

Hitendra Jha, Head of Retail Liabilities at Ujjivan Small Finance Bank, noted that this enhancement aligns with the RBI's vision to mobilize stable foreign currency deposits. By offering one of the most competitive rates in the industry, the bank aims to boost NRI confidence and contribute to India's long-term foreign exchange reserves and financial stability.

DBS Bank India Offers Competitive 5.6% Rates

Following a similar trajectory, DBS Bank India has also revised its rate structure to align with the RBI’s policy direction. The bank is now offering up to 5.6% per annum on USD FCNR(B) deposits for tenures ranging from three to five years, effective from July 1, 2026.

DBS Bank is positioning its FCNR(B) product as a low-risk, high-reward instrument for overseas Indians. A key advantage highlighted by the bank is that FCNR(B) deposits allow investors to maintain savings in foreign currency, effectively eliminating exchange-rate risk. Since both the principal and the interest are repaid in the designated foreign currency at maturity, investors are protected from the volatility of the Rupee.

Why FCNR(B) Deposits are Gaining Momentum

The current shift in interest rates is a direct response to the RBI's policy initiatives designed to strengthen India's external sector and bolster foreign exchange reserves. For NRIs, these deposits offer a strategic way to earn competitive returns while global interest rates remain elevated.

Furthermore, the ease of banking is becoming a major differentiator. DBS Bank, for instance, has integrated its FCNR(B) offering with its "DBS Treasures" proposition, providing wealth management and investment solutions. The bank has also streamlined the process through digital onboarding, allowing eligible customers to open accounts and invest from overseas without the need for physical travel to India.

This intensifying competition between banks reflects a broader economic effort to ensure sustainable growth by attracting stable, long-term foreign currency inflows into the Indian banking system.

Key Takeaways

  • Aggressive Rate Hikes: Ujjivan Small Finance Bank is offering a high of 7.50% p.a. on USD FCNR(B) deposits for 3-5 year tenures, while DBS Bank India offers up to 5.6% p.a.
  • Risk Mitigation: FCNR(B) deposits are highly attractive to NRIs because they eliminate exchange-rate risk, as all repayments are made in the original foreign currency.
  • RBI Policy Driver: The rate revisions are fueled by RBI measures intended to encourage banks to mobilize foreign currency to strengthen India's foreign exchange reserves.