Ujjivan SFB and DBS Bank Revamp FCNR(B) Rates to Attract NRI Funds

As the Reserve Bank of India (RBI) pushes to strengthen the nation's foreign exchange reserves, Indian banks are aggressively competing to attract Non-Resident Indian (NRI) capital. Leading lenders are now offering significantly enhanced interest rates on Foreign Currency Non-Resident (Bank) [FCNR(B)] deposits to capture stable USD inflows.

Ujjivan Small Finance Bank Leads with 7.5% Interest

In a move to position itself as a top-tier player for overseas investors, Ujjivan Small Finance Bank has announced a major hike in its interest rates for USD FCNR(B) deposits. The bank is now offering a competitive 7.50% per annum for a tenure of 3 to 5 years.

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 into the banking system. 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 financial stability and external sector strength.

DBS Bank India Offers Competitive Rates and Digital Access

DBS Bank India has also revised its rate structure in response to the shifting policy landscape. The bank is 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.

Beyond interest rates, DBS is focusing on the user experience for the diaspora. Through its "DBS Treasures" proposition, the bank integrates wealth management with seamless digital onboarding. This allows eligible NRIs to open accounts and invest in FCNR(B) deposits entirely from overseas, removing the traditional requirement of visiting an Indian branch to manage investments.

Why FCNR(B) Deposits are Gaining Momentum

The surge in interest rates is a direct result of the RBI’s policy initiatives aimed at encouraging banks to build up foreign currency deposits, which bolsters India's external financing needs. For the NRI segment, FCNR(B) deposits offer a unique dual advantage:

  1. Elimination of Exchange-Rate Risk: Unlike NRE or NRO accounts where funds are converted to INR, FCNR(B) deposits allow the principal and interest to be repaid in the original foreign currency. This protects investors from the volatility of the Rupee.
  2. High Yield in a High-Rate Environment: With global interest rates remaining elevated, these enhanced domestic offerings provide a lucrative way for NRIs to park USD savings without the risk of currency conversion losses at maturity.

As competition intensifies between small finance banks and established private players, the NRI segment is finding more diverse and high-yielding avenues to contribute to India's economic growth while securing their own global wealth.

Key Takeaways

  • Aggressive Rate Competition: Ujjivan Small Finance Bank is leading the charge with a high 7.50% interest rate on 3-5 year USD FCNR(B) deposits, while DBS Bank offers up to 5.6%.
  • Strategic RBI Support: These rate hikes are driven by RBI initiatives to stabilize foreign exchange reserves and encourage long-term foreign currency inflows.
  • Risk Mitigation for NRIs: FCNR(B) remains a preferred instrument for overseas Indians because it eliminates exchange-rate risk by repaying both principal and interest in foreign currency.