Best FCNR Rates in India 2026: SBI vs HDFC vs ICICI vs Axis vs AU SFB

If you’re an NRI with dollars sitting in a US savings account earning 4–5%, you may want to pay attention right now. Indian banks are suddenly offering up to 7.1% on dollar deposits - and the window to lock in these rates closes on September 30, 2026.

This article breaks down the current FCNR rates across India’s biggest banks, explains what’s driving this unusual rate surge, and helps you figure out which bank is the right fit for your situation.

First, what is an FCNR deposit?

FCNR stands for Foreign Currency Non-Resident (Bank). It’s a fixed deposit that lets NRIs and OCIs park money in foreign currencies - US dollars, British pounds, euros, Canadian dollars, Australian dollars, or Japanese yen - with an Indian bank.

The key advantage: you don’t take on any currency risk. Your money goes in as dollars, and comes back as dollars, along with the interest. There’s no conversion to rupees and back.

FCNR deposits have a minimum tenure of 1 year and a maximum of 5 years. The interest earned is exempt from Indian income tax for NRIs (though it may be taxable in your country of residence).

Why are FCNR rates so high right now?

Normally, FCNR deposit rates hover between 3% and 3.5%. So why are banks suddenly offering 6–7%?

On June 8, 2026, the Reserve Bank of India (RBI) opened a special swap facility for FCNR deposits. Under this scheme, the RBI effectively covers the currency hedging cost that Indian banks normally have to pay when they accept foreign currency deposits. That cost used to run about 2.5–3.5% per year, which is precisely why FCNR rates were low.

By removing that cost, the RBI has allowed banks to pass the savings directly to depositors. On top of that, the RBI has also exempted these deposits from the cash reserves banks are normally required to maintain (CRR and SLR), freeing up even more room for banks to offer better returns.

The result: the highest FCNR rates India has seen in over a decade.

This scheme is available for deposits opened between June 8 and September 30, 2026. After that date, rates are expected to return to normal levels.

FCNR Rates Comparison Table (USD, June 2026)

Rates below are for USD deposits under the RBI’s special scheme. All rates apply to the 3–5 year tenure bracket, where the biggest increases have happened.

*SBI’s 5.25% rate applies to deposits up to $1 million for 3–4 year tenure. Rates for deposits above $1 million may be negotiable - check directly with the bank.

Rates are accurate as of June 12, 2026, and subject to change. Always confirm the latest rate directly with the bank before opening a deposit.

Highest FCNR rate today: AU Small Finance Bank at 7.10%

AU Small Finance Bank is currently offering the highest FCNR rate in India at 7.10% for 3–4 year USD deposits, and 7.00% for 4–5 year deposits. This is a significant jump from its previous rate of 5.15%.

But a high rate isn’t the only thing that matters. AU SFB is a licensed, RBI-regulated institution, but it is smaller than SBI, HDFC, or ICICI. Deposit insurance in India covers only ₹5 lakh per depositor per bank — roughly $5,900 at current exchange rates. Anything above that amount is an unsecured claim on the bank. If you’re considering a large deposit with a smaller bank, weigh the credit risk alongside the rate.

Best bank for large deposits: HDFC Bank or SBI

If you’re parking a significant sum - say, $100,000 or more - the stability and size of the bank matters more.

HDFC Bank is India’s largest private sector bank by assets. It’s offering 6.00% on 3–5 year USD deposits, effective June 10, 2026. For NRIs who want competitive rates without worrying about bank health, HDFC is a safe choice.

SBI is India’s largest bank overall and carries an implicit sovereign backing as a state-owned institution. Its current rate of 5.25% is lower than HDFC’s, but SBI may be worth the trade-off for large deposits where counterparty risk is a real concern. Rates above $1 million may be negotiable - worth calling their NRI banking desk.

Best bank for existing customers: ICICI or Axis

Both ICICI Bank and Axis Bank are offering 6.00% on 3–5 year USD deposits. If you already hold an NRE/NRO account with either of these banks, opening an FCNR deposit is typically seamless — often done fully online through the bank’s NRI portal without needing to visit a branch or courier documents.

For NRIs already in the ICICI or Axis ecosystem, convenience and relationship benefits (like preferential remittance rates or dedicated NRI relationship managers) may tip the scale.

Public sector vs private sector vs small finance banks

Public sector banks (SBI, PNB, Bank of Baroda): Lower rates but highest perceived safety. SBI in particular is seen as a government-backed institution. Suitable for very conservative depositors or very large deposits.

Private sector banks (HDFC, ICICI, Axis): Competitive rates at 6.00%, strong balance sheets, good NRI servicing infrastructure, and easy online account management. The sweet spot for most NRIs.

Small finance banks (AU SFB, KVB): Highest rates, but smaller institutions. Suitable for investors comfortable with slightly more counterparty risk in exchange for higher yield. Keep individual deposits under ₹5 lakh per bank if deposit insurance protection matters to you.

What else should you compare besides interest rates?

Minimum deposit

Most banks don’t publish a strict minimum for FCNR deposits, but they’re most practical for amounts of $5,000 or more.

Premature withdrawal rules

Under the RBI’s current scheme, FCNR deposits carry a mandatory 1-year lock-in. You cannot withdraw your money in the first 12 months. After that, each bank applies its own premature withdrawal penalty — typically 1–2% on the applicable interest rate for the tenure already completed.

Ease of account opening

Opening an FCNR deposit requires KYC documentation — typically a passport copy, visa/OCI copy, overseas address proof, and PAN (if you have one). ICICI, HDFC, and Axis all support 100% online or video KYC. Smaller banks may require more manual handling.

Tax implications in your country of residence

Interest on FCNR deposits is tax-free in India for NRIs. But if you’re in the US, UK, Australia, or Canada, you will likely owe tax on this interest income locally. Account for your tax situation before comparing FCNR returns to alternatives like US Treasuries or high-yield savings accounts.

Final comparison: which bank should you pick?

No matter which bank you choose, the key deadline is September 30, 2026. The elevated rates exist because the RBI is subsidising them through its swap window. Once that window closes, FCNR rates will revert toward historical norms.

Last updated: June 12, 2026. Rates are subject to change — always confirm directly with the bank before opening a deposit. This article is for informational purposes only and does not constitute financial advice.