NRIs: Ujjivan SFB and DBS Bank Revamp 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. Major players like Ujjivan Small Finance Bank and DBS Bank India have announced significant interest rate revisions on Foreign Currency Non-Resident (Bank) deposits to capture this growing segment.

Ujjivan SFB Leads with High-Yield USD Returns

Ujjivan Small Finance Bank has emerged as a frontrunner in the race for NRI funds by significantly boosting its interest rates. The bank has increased the interest rate on USD FCNR(B) deposits for a tenure of 3 to 5 years to a substantial 7.50% per annum. This move positions Ujjivan among the highest-paying institutions in the industry for this specific asset class.

Hitendra Jha, Head of Retail Liabilities at Ujjivan Small Finance Bank, noted that this enhancement aligns with the RBI's vision to stabilize foreign exchange reserves. By offering these competitive rates, the bank aims to mobilize long-term foreign currency deposits, which contributes to India's overall financial stability and sustainable economic growth.

DBS Bank India Enhances Competitive Edge and Digital Access

Following the same policy direction, DBS Bank India has revised its rates to offer up to 5.6% per annum on USD FCNR(B) deposits for the 3-5 year tenure, effective from July 1, 2026. While the rate is lower than Ujjivan's, DBS is leveraging its comprehensive "DBS Treasures" proposition, which integrates banking, wealth management, and investment solutions.

A key differentiator for DBS is its focus on seamless digital onboarding. Eligible NRI customers can complete their entire onboarding process from overseas, allowing them to open accounts and invest in FCNR(B) deposits without the need for a physical visit to India. This digital-first approach caters to the modern, global Indian professional seeking efficiency alongside returns.

Why FCNR(B) Deposits are Gaining Traction

The surge in interest rate offerings is a direct response to the RBI's policy initiatives aimed at strengthening India's external sector. FCNR(B) deposits are particularly attractive to NRIs for several structural reasons:

  1. Elimination of Exchange-Rate Risk: Unlike NRE accounts where funds are converted to INR, both the principal and interest in an FCNR(B) account are repaid in the original foreign currency (e.g., USD). This protects investors from volatility in the INR/USD exchange rate at the time of maturity.
  2. High Global Yields: With global interest rates remaining elevated, NRIs are looking for sophisticated ways to park their dollars. The enhanced rates offered by Indian banks provide a compelling alternative to traditional savings.
  3. Economic Stability: For the Indian economy, these deposits provide a stable source of foreign exchange, helping to bolster the country's foreign exchange reserves and support external financing needs.

Key Takeaways

  • Competitive Returns: Ujjivan SFB is offering a high-yield 7.50% p.a. on USD FCNR(B) deposits for 3-5 year tenures, while DBS Bank offers up to 5.6% p.a.
  • Risk Mitigation: FCNR(B) deposits allow NRIs to earn interest while eliminating currency conversion risk, as payouts occur in the original foreign currency.
  • Strategic Shift: These rate hikes are driven by RBI policy to encourage stable foreign currency inflows and strengthen India's foreign exchange reserves.