Major Indian banks including HDFC Bank, State Bank of India, and Axis Bank are raising interest rates on five-year Foreign Currency Non-Resident (B) deposits.
The move follows the government's decision to extend its subsidy on hedging costs for these accounts until September 30, 2026, effectively removing currency risk for non-resident investors holding dollar-denominated fixed deposits.
The policy extension has triggered a repricing of deposit rates across the sector.
With the state absorbing the cost of hedging against rupee depreciation, banks can offer higher yields to attract foreign capital without bearing the associated foreign exchange risk.
This structural change makes FCNR(B) accounts significantly more attractive compared to previous periods when banks had to factor hedging costs into their pricing.
The rate competition is intensifying among top lenders, including ICICI Bank and Punjab National Bank, as they vie for non-resident Indian and Overseas Citizen of India deposits.