Ujjivan SFB and DBS Bank Raise FCNR(B) Rates to Attract NRI Dollars

As the Reserve Bank of India (RBI) pushes to bolster the nation's foreign exchange reserves, Indian banks are intensifying their competition to attract Non-Resident Indian (NRI) capital. Major lenders, including Ujjivan Small Finance Bank and DBS Bank India, have revised their interest rates on Foreign Currency Non-Resident (Bank) deposits to offer more lucrative returns on USD holdings.

Ujjivan SFB Leads with 7.5% Interest on USD Deposits

In a significant move to capture the NRI segment, Ujjivan Small Finance Bank has aggressively hiked its interest rates on USD FCNR(B) deposits. For a tenure of 3 to 5 years, the bank is now offering an impressive 7.50% per annum. This rate positions Ujjivan among the highest-paying institutions in the industry for this specific category.

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 inflows. By offering competitive rates, the bank aims to boost NRI confidence and contribute to India's long-term financial stability and external sector strength.

DBS Bank India Offers Competitive Rates and Digital Ease

DBS Bank India has also adjusted its pricing strategy to align with the evolving regulatory landscape. The bank is offering interest rates of up to 5.6% per annum on USD FCNR(B) deposits for tenures ranging from three to five years, effective from July 1, 2026.

Beyond competitive yields, DBS is focusing on the convenience of the NRI customer experience. Through its DBS Treasures proposition, the bank provides a blend of wealth management and investment solutions. Crucially, DBS has enabled digital onboarding from overseas, allowing NRIs to open accounts and invest in FCNR(B) deposits seamlessly without the need for a physical visit to India.

The Strategic Importance of FCNR(B) Deposits

The recent rate revisions are a direct response to RBI policy initiatives aimed at strengthening India's foreign exchange reserves. FCNR(B) deposits serve as a vital tool for the country's external financing needs by encouraging the inflow of stable, long-term foreign currency.

For the individual investor, the FCNR(B) product offers a unique advantage: the elimination of exchange-rate risk. Because both the principal amount and the interest earned are repaid in the original foreign currency, NRIs can earn competitive returns on their savings without worrying about the volatility of the Indian Rupee (INR) at the time of maturity.

As global interest rates remain elevated, the race between Indian banks to secure these dollar inflows is expected to intensify, providing NRIs with more diverse and high-yielding options for their overseas savings.

Key Takeaways

  • Higher Yields: Ujjivan Small Finance Bank is offering a highly competitive 7.50% per annum on USD FCNR(B) deposits for a 3-5 year tenure.
  • Risk Mitigation: FCNR(B) deposits allow NRIs to earn interest while eliminating currency conversion risk, as payouts are made in the original foreign currency.
  • Regulatory Driver: The surge in interest rates is driven by RBI measures intended to mobilize stable foreign currency inflows to strengthen India's forex reserves.