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

As the Reserve Bank of India (RBI) pushes to bolster foreign exchange reserves, Indian banks are intensifying their competition to attract Non-Resident Indian (NRI) capital. Leading lenders are now offering significantly enhanced interest rates on Foreign Currency Non-Resident (Bank) deposits to capture stable USD inflows.

Ujjivan SFB Leads with 7.5% Interest on USD Deposits

In a major move to capture the NRI segment, Ujjivan Small Finance Bank has aggressively hiked its interest rates for USD FCNR(B) deposits. For a tenure of 3 to 5 years, the bank is now offering a high yield of 7.50% per annum. This positioning places Ujjivan among the most competitive players in the market for long-term foreign currency savings.

Hitendra Jha, Head of Retail Liabilities at Ujjivan Small Finance Bank, noted that this rate enhancement aligns directly with the RBI's vision to mobilize stable foreign currency deposits. The bank aims to provide high-yield investment opportunities for NRIs while simultaneously contributing to India's long-term financial stability and strengthening the country's external sector.

DBS Bank India Offers Competitive 5.6% Returns

Following a similar 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 July 1, 2026. While the rate is lower than Ujjivan's aggressive offering, DBS is leveraging its comprehensive "DBS Treasures" proposition, which integrates banking, wealth management, and investment solutions tailored for overseas Indians.

A significant advantage highlighted by DBS is the digital onboarding process. Eligible NRI customers can complete their entire onboarding journey from overseas, allowing them to open accounts and invest in FCNR(B) deposits seamlessly without the need to travel to India.

The Strategic Importance of FCNR(B) for NRIs and India

The surge in interest rates is a strategic response to the RBI's policy initiatives aimed at strengthening India's foreign exchange reserves. By encouraging banks to attract these deposits, the central bank seeks to build a buffer against external economic shocks.

For the individual NRI investor, FCNR(B) deposits offer a unique dual advantage:

  • Elimination of Exchange-Rate Risk: Since both the principal amount and the interest earned are repaid in the original foreign currency (USD), investors are protected from the volatility of the Rupee.
  • Competitive Yields: With global interest rates remaining relatively elevated, these enhanced domestic rates provide a lucrative way to park foreign savings.

As competition intensifies between small finance banks and large private players, NRIs have more diverse and high-yielding options than ever to manage their foreign currency liquidity while supporting India's macroeconomic goals.

Key Takeaways

  • Aggressive Yields: Ujjivan Small Finance Bank is offering a high interest rate of 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 in foreign currency, effectively removing the risk of currency conversion fluctuations at maturity.
  • Policy Driven: The increase in rates is a direct result of RBI measures intended to boost India's foreign exchange reserves and stabilize the external sector.