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. Major players like Ujjivan Small Finance Bank and DBS Bank India have revised their Foreign Currency Non-Resident (Bank) deposit rates to offer more attractive returns on US Dollar holdings.

Ujjivan SFB Leads with High-Yield 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 the 3-5 year tenure bracket, the bank is now offering a substantial 7.50% per annum.

Hitendra Jha, Head of Retail Liabilities at Ujjivan Small Finance Bank, noted that this enhancement is directly aligned with the RBI's vision to mobilize stable foreign currency inflows. By offering one of the most competitive rates in the industry, the bank aims to provide NRIs with high-yield opportunities while contributing 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 structure to align with the current policy direction. The bank is offering up to 5.6% per annum on USD FCNR(B) deposits for tenures ranging from three to five years.

Beyond interest rates, DBS is focusing on the convenience of the NRI experience through its "DBS Treasures" proposition. The bank has streamlined the process by allowing eligible customers to complete digital onboarding from overseas. This enables NRIs to open accounts and invest in FCNR(B) deposits seamlessly without the need for a physical visit to India, combining wealth management with ease of access.

The Strategic Advantage of FCNR(B) for NRIs

The current surge in interest rates is driven by the RBI's initiative to encourage banks to collect stable foreign currency, which strengthens India's forex reserves. For the individual investor, FCNR(B) deposits offer a unique strategic advantage: the elimination of exchange-rate risk.

Unlike standard NRE deposits where returns are subject to currency fluctuations, both the principal and the interest in an FCNR(B) account are repaid in the designated foreign currency (in this case, USD). This makes it an ideal vehicle for overseas Indians who wish to earn competitive interest rates on their dollar savings while maintaining the original value of their capital in USD.

With global interest rates remaining elevated, the competition among Indian lenders to tap into the NRI liquidity pool is expected to intensify, providing a wealth of options for those looking to park their foreign earnings.

Key Takeaways

• Aggressive Interest Rates: Ujjivan SFB is leading the segment with a 7.50% p.a. return on USD FCNR(B) deposits for the 3-5 year tenure, 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 both principal and interest are returned in the original foreign currency.
• RBI Policy Driver: These rate hikes are a direct response to RBI measures aimed at strengthening India's foreign exchange reserves and supporting the country's external sector.