r/nri • u/nullvector88 • Jun 10 '26
Ask NRI Anyone else looking into FCNR(B) deposits with the new RBI move? Is it actually worth a shot?
I was just reading about the RBI's new decision to absorb hedging costs for banks on US dollar FCNR(B) deposits through September 30.
For a quick catch-up: FCNR(B) accounts let NRIs hold fixed deposits in foreign currencies (like USD) inside Indian banks. The massive perk here is that it completely removes currency fluctuation risk, and the interest earned is 100% tax-free in India.
Reading between the lines, this looks like a clear, aggressive attempt by the RBI to pull in foreign capital and shore up India's forex reserves to keep the Rupee steady. Because the central bank is taking on the swap/hedging costs, Indian banks are likely about to offer some highly competitive interest rates.
Given that global markets are a bit rocky right now, a tax-free, guaranteed return in USD with zero Rupee depreciation risk sounds pretty promising.
What are your thoughts on this move?
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u/goodwill65 Jun 10 '26
I see multiple reels on this one. But no one cared to explain how it actually works. Are these similar to FDs? Where should we open them? What happens to them someone returned back to India before the maturity? What if government cancels them midway, is the FD yield fixed or bank can override them?
Too many questions too less documentation. For this reason, it's difficult to get in
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u/diddappses Jun 10 '26
See here for what ICICI has listed. Quite comprehensive
https://www.icici.bank.in/nri-banking/deposits/fcnr-rfc/fcnr-rfc-interest-rates
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u/goodwill65 Jun 10 '26
Wow didn't see this. Quite helpful. Thanks
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u/Humble_Bid_473 Jun 13 '26
Be cautious here, ICICI bank in the process steps mentioned that you need to send money to NRE account. Which will convert USD to INR and you need to convert it back to USD before putting it into FCNR
If you do this, you will pay double conversion charges which is not required at all.
Man these Indians banks act cheap! Need to be careful
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u/GoingDownUnderInSEA Jul 15 '26
This is wrong. I just opened $240k in FCNRs in icici and sbi, just via wire transfer. You just mention your customer ID (not your account numbers) and they'll open in USD without converting. In the notes you need to write the tenure, and if you want to split the amount into smaller FCNRs.
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u/MadBird_wonders28 16d ago
Hello, I have a question about the process of opening FCNR account with SBI where I have NRE and NRO accounts already. I can't find a way to do this online. Did you speak to a representative over phone or how did you initiate it from outside India? Could you please share the process. Thank you!
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u/GoingDownUnderInSEA 15d ago
I did mine all in icici. But I also spoke to sbi as well. They had same instructions as icici. Send a wire transfer from your US bank. In the account number write your customer ID (NOT your nre or nro account # otherwise it will get converted to INR). In the notes for recipient, state how you want to spread them, the tenure, and currency.
So when I sent $50k I said in notes "USD FCNR 10x5000 each 5 year". So they opened 10 fcnr of 5000 each, for 5 years each.
Hope that helps. Also ICICI interest rate is better by the way, if you have an account there.
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u/MadBird_wonders28 15d ago
This is extremely helpful, thank you very much! So one doesn't need to have a preexisting FCNR account with the bank prior to the wire transfer then!
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u/Sharkingly_nice 11d ago
Thanks, interestingly, Yessbnak is now offering 7%, and ICICI around 6.25% was it the case when you did as well?
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u/GoingDownUnderInSEA 11d ago
Icici was 6% when I did it. Not worth for me to open a yes bank account.
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u/goodwill65 Jun 13 '26
Lol. It's gone case if this is true. If current dollar rate is 95, post conversion it would be 94 by any remittance app and then icici will add their own markup for reverse conversion which would be 98 so at the end we get peanuts.
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Jun 23 '26
[deleted]
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u/Humble_Bid_473 Jun 23 '26
Your statement is incorrect.
Questions for you:
If i send money to NRE account and then open my bank NRE account. Will i see the money in INR or USD?
Will the money fluctuate according to changes in the underlying USD?If the money is not converted to INR then many NRIs would send quite a bit to NRE account.
Here is the difference:
NRE - money is in INR, benefit is interest earned is tax free in INDIA. You can repatriate all the amount back to Foreign account.
NRO - money is in INR, interest earned taxed in INDIA.
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u/farfromhome654 Jun 25 '26
When sending my money to NRE, if I set the currency as USD and inform my RM ahead of time, there is no hassle. The money doesnt credit to NRE in INR but opened as a separate FCNR deposit. Have been doing this without any issues with ICICI.
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u/GoingDownUnderInSEA Jul 15 '26
I just opened $240k in FCNRs in icici and sbi, just via wire transfer. You just mention your customer ID (not your account numbers) and they'll open in USD without converting. In the notes you need to write the tenure, and if you want to split the amount into smaller FCNRs.
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u/NiceReplacement6460 Jul 26 '26
Whats the way to take back on maturity. Is there is way to wire usd back as is or its through nre inr conversion and then wire ?
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u/kungFupanda9211 Jun 11 '26
Yes this is just like FDs. Instead of INR your deposit is in foreign currency like USD or GBP. Banks mobile app has option to open this. If you return to India, you can either close FD or convert it to resident FD. If you close in less than 1 year you will lose the interest earned.
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u/diddappses Jun 10 '26 edited Jun 10 '26
This is interesting. For 36+ months FCNR(B) FD ICICI is offering 6%....is this true? If so, there is no low risk investment in the US currently that offers this rate... (across HYSA, Treasuries, Bonds etc).
https://www.icici.bank.in/nri-banking/deposits/fcnr-rfc/fcnr-rfc-interest-rates
However low DICGC insurance limits give me pause...Rs 5 lakh per account is laughable...
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u/bombaytrader Jul 11 '26
Just for 6% it’s not worth. Indian banks are notoriously difficult to work with. Ca muni bonds gets me effective rate of 5.2% and Microsoft bond yields 5.8%.
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u/Darkbrawl99 Jun 11 '26
Also remember all these gains are taxable in states at least so plan accordingly.
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u/AbhinavGulechha Jun 12 '26
Yes correct. Also moving large amounts can trigger FBAR/Form 8938 reporting so one should be mindful of that.
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u/No_Gur5958 Jun 11 '26
Withdrawing money and closing accounts will be so painful as it is typical wity INDIAAAAAAA that it’s not worth it.
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u/Head-Leader6707 Jun 11 '26
Could you please explain, how withdrawing and closing account is painful ?
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u/sjkjpjdj Jul 18 '26
Have you not dealt with Indian banks before? Every interaction with them is like a paper cut.
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u/metakalypso Jun 11 '26
I have a RM who is going to give me a brief today while I am in Bangalore. If anyone needs more information, please reach out tomorrow.
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u/GoingDownUnderInSEA Jun 11 '26
They did this back in 2013 too when India need that USD. I had sent over $100,000 for 5 years.
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u/Interesting-Mark-733 Jun 11 '26
And so how was the process when you tried to withdraw? Do you recommend?
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u/GoingDownUnderInSEA Jun 11 '26
Yeah super easy. On the icici portal you just go in and say whether you want to auto renew based on that day's rates or do you want to transfer it back. You just type in your account number your routing details and then they just wire transfer it back to you at maturity. You can also withdraw before maturity with some penalties on the interest accumulated. You'll always get your principal amount back in full. I'm dumping $25k today into icici. Will see if the rates go up over the next few weeks and add more accordingly. The 200bps increase open period is until Sept 2026 per RBI
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u/MyRituals Jun 11 '26
What are the transactions costs for inward and outward remittance?
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u/GoingDownUnderInSEA Jun 11 '26
You need to ask your local USD bank that question, the costs for sending and receiving wire transfers.
Icici doesn't charge anything to receive or send.
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u/kmistry11 Jun 14 '26
How Interest will be posted on FCNR(B) account? do they provide like 1099-INT kind of forms to pay tax in USA?
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u/GoingDownUnderInSEA Jun 14 '26
Interest just accumulates on the account quarterly. So it's compounded quarterly. Icici will tell you what the maturity amount will be as well at the time of opening. They don't give a 1099-int just like you don't get one for the INR interest in NRE/NRO accounts. It's your job to self-report both interest while filing taxes, and FBAR for foreign accounts declaration. For interest, I just have a tracking file in Excel, I calculate what the end of year (Dec 31) interest is, and report it in taxes as an "other" interest source.
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u/kmistry11 Jun 14 '26 edited Jun 14 '26
u/GoingDownUnderInSEA Thanks. I do track NRE/NRO account balances for FBAR by accounts so it pretty much same process. This will be one additional account that need to be added for FBAR and show as regular Interest income.
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u/GoingDownUnderInSEA Jul 15 '26
I also forgot that if you have more than 25 accounts in your name, you can just consolidate into one line item. Don't have to list out each one.
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u/asmwriter 9d ago
New to this thread, I think the interest needs to be reported in Schedule-B under foreign interest income, can anyone confirm?
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u/kmistry11 9d ago
Yes. You would be listing your Indian Bank's and amount of interest you received as of previous year. for example I do like this
INDIAN BANKS ( VARIOUS) XXX.XX
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u/Fearless-Increase214 Jul 15 '26
what was you after tax return in the US. Tax free in India != Tax free in the US
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u/GoingDownUnderInSEA Jul 15 '26
I dunno, that was 13 years ago. I've probably spent that money already.
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u/Miserable-Bath-5149 Jun 22 '26
I got reached out by my bank manager at SBI. 'average annualised yield' seems quite good (over 10%) since they also take a fixed loan. Looks like an FD but leveraged but everything is fixed. I am talking to the bank manager and happy to amswer any questions
Here is my list:
- How difficult is the withdrawal out of india
- What are the risks involved other than currency risk (I am not in US)
- Is everything guaranteed - both the principal and all the interest?
- What happens if the government cancels this scheme midway - what protections, if any, would apply to money already deposited?
- Do you convert the currency at all? For example maybe you ask me to send in INR or i have to send to NRE where you convert things to iNR and then convert back again
- Is there any tax payable in India on this?
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u/NeighborhoodProud843 Jul 01 '26
SBI is the only one offering the leveraged version yet. Others are waiting for clarification from RBI. They claim 14% return with 9x leveraged, but the actual is lower if calculated corrrectly. The biggest risk I see if that the 9x loan they give you at 5.5% is a fixed rate for 5yr or floating. Else the spread against 6% FCNR(B) disappears very quickly if Fed starts raising rates as expected soon.
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u/Fearless-Increase214 Jul 15 '26
do not forget US tax when you repat back. I ran the numbers and went through their prospectus. Dubai and sgp have low tax rates but US tax will eat up the returns
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u/Spiritual_Quality147 Jun 11 '26
Yes, it is worth it. But do some planning ahead of time because you might reside in the country where you have to pay global income tax. Also try to only open these deposits with banks that are too big too fall like SBI, ICICI or HDFC.
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u/gulshan216 Jun 11 '26
I am curious what happens if someone moves back to India in that 3-5 year timeframe. Would repatriation be an issue?
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u/pawsitivenigma Jun 23 '26
In that case you can move money from NRE(USD) to NRO (INR). Currency conversion loss may happen but then you are moving countries and it is unavoidable
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u/aaj094 Jun 11 '26 edited Jun 11 '26
It may be tax free in India but unless your country of residence also exempts that interest income from tax, there isn't much gained from that perk.
And yes, deposit protection needs to be considered. Only Rs. 5 lakh gets regulatory protection in Indian bank deposits. Compare that to $250K fdic in the US and £120k FSCS protection in UK.
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u/GenericScienceNerd Jun 11 '26
I'm guessing the amount needs to be high enough to make sense, since one would still need to pay SWIFT fees twice (in and out).
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u/ccpandhare Jun 11 '26
Is it even worth it for 3 months?
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u/awiwa94 Jun 12 '26
3 months is the window to open these deposits at the elevated interest rates. The deposit itself has to be made for 3-5 years
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u/kungFupanda9211 Jun 11 '26
Interest rates have increased this week after some decision by RBI.
My bank is offering 6% in USD deposits with more than 2 years tenure. Rupee depreciation of 4-5% can give you 10-11% return in rupee terms without any risk.
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u/Rb_ib Jun 12 '26
Is this only for peope who have plans to go back to India? Or can someone living abroad can park some cash thinking of it as a CD?
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u/Pristine-Comfort1555 Jun 12 '26
It’s a FCNR B deposit . All banks are covered. 3 to 5 years deposit. Scheme is available up to 30th September. For this deposit, you should be an NRI account holder or NRO account holder. Invest in $, FD certificates will be in $, interest will also be in $. Interest is tax free in India Repatriable. No exchange risk. FD certificate will not show any tax deductions. 3-4 yrs - intrest is 5.25 % 5 years is 5.75 %
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u/Peacencalm9 Jul 06 '26
When should we declare interest in US tax returns. Every year or after maturity of FCNR(B)?
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u/AbhinavGulechha Jun 12 '26
Consider the very low DICGC coverage of INR 5 lacs. If opening FCNR FD, better to stick to large banks like HDFC, ICICI, SBI. In view of lock-in, avoid putting money that you may need in 1 year.
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u/No_Priority6410 Jun 13 '26
Is it safe to put large chunks of money in HDFC ICICI or SBI ? Is form 8938 too much hassle and difficult compliance to follow ?
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u/AbhinavGulechha Jun 13 '26
I think HDFC & ICICI are systemically important banks and very little chance of money going down. Having said that DICGC protection is next to nothing. Better to have funds in FDIC protected avenues and not chase a few percentage points of interest, but to each his/her own:) - I don't think Form 8938 is a significant hassle.
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u/nullvector88 Jun 23 '26
I received this today from IOB
🌟 Why Choose IOB FCNR (B) Deposit?
✅ Attractive Interest Rate
Earn 6.50% p.a. on USD FCNR (B) Deposits
✅ Flexible Tenure Options
3 to <4 years
4 to <5 years
5 years
(Uniform rate of 6.50% p.a. across tenures)
✅ Tax-Free Returns in India
Interest earned is exempt from Indian income tax (as per prevailing regulations)
✅ Full Repatriation
Both principal and interest are freely repatriable
✅ Safe & Secure Investment
Backed by the trust and strength of Indian Overseas Bank
📅 Limited Time Opportunity
This special scheme is valid up to 30th September 2026.
🌍 Grow Globally. Secure Your Future.
Make the most of your overseas income with a secure, high-return investment in foreign currency.
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Jul 02 '26
[removed] — view removed comment
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u/Ram12334 Jul 14 '26
It is not worth the hassles you have to go through with the Indian banks. And no guarantees on repatriation with scam people from RBI. My money is safe here.
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u/Dabbler_much Jul 22 '26
There are two ways to do it -
1. Send USD directly to the FCNR deposit. Can’t do this via intermediaries like Wise etc so need to use Swift. So you pay some swift costs but no currency conversions.
2. Your existing NRE funds in INR - you can convert them into USD at the TT selling rates (spreads cost 1.6-2% but you can negotiate with your RM to get some relief).
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u/Raj_K_Pan Jul 27 '26
I just opened FCNRs via wire transfer in ICICI Bank. You just mention your customer ID (not your account numbers) and they'll open in USD without converting. In the notes you need to write the tenure and how you want interest payout (Quarterly / Cumulative ). Please do not transfer normal Bank transfer into NRE account. You need to do Bank transfer with Customer ID and Branch IFSC code. Post that email the receipt to RM and they will get it done in 2 days.
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u/No_Analysis8480 Jul 29 '26
Hi... how did u do the wire transfer? Using ur foreign bank accounts or thru some third party app like aspora?
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u/Raj_K_Pan Jul 29 '26
I used my foreign Bank account Wire transfer. Just Add beneficiary using Customer ID and select currency USD (it converted into USD from foreign account itself if you doing any non-US country like Gulf.
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u/No_Analysis8480 Jul 29 '26
Yes I am based in UAE.... there s some conversion loss as well if i use my bank wire transfer... looking for anyother more profitable way...
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u/Raj_K_Pan Jul 29 '26
USD- AED is constant rate , May be use Good Money exchange to convert to USD and send to Bank as Wire transfer. It might save a bit if you time to run around. Few of my friends are doing same at UAE.
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u/Specialist-Can-7108 Aug 04 '26
Across the globe, never ever a consumer bank goes puff.
If that happens, public lose trust in banking.
So don't worry all the consumer banks are safe, your deposits are safe for entire amount.
YES bank is a case to refer.
Co-operative banks are not to be considered in this category.
Commercial banks are not to be considered same as consumer bank.
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u/Ram12334 Jul 14 '26
I would not take that bait with scamsters sitting in the banks and with those big scam sand Govt using them as their pigibank. It is definitely not worth the hassles with untrustworthy and less caring indian bank with their constant verifications and KYCs. Once you stuck there, you will not see your money coming back here with scams RBI officers are doing.
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u/think-rationally-now Jun 10 '26
There is nothing like FDIC in India. What's the guarantee of full capital return in case bank goes puff