Indian Banks Hike Interest Rates on FCNR(B) Fixed Deposits Amid Hedging Cost Relaxation

Two major Indian banks have increased interest rates on Foreign Currency Non-Resident (Bank) - FCNR (B) fixed deposits. HDFC Bank and ICICI Bank hiked their respective FCNR (B) deposit rates by 25 basis points each, from June 2026's level.

The rate hike is in response to the government relaxing hedging costs on select FCNR (B) deposits, effective until September 30, 2026. HDFC Bank has increased its FCNR (B) interest rates to 6.25% for tenures ranging from three to five years. ICICI Bank has also raised its interest rate to 6.25%, applicable only on deposits above USD 4 million.

The relaxation of hedging costs is expected to benefit Non-Resident Indians looking to park their foreign currency savings in India. The tax-free nature of FCNR (B) deposit earnings makes them an attractive option for NRIs.