FCNR(B) Account Guide 2026: Interest Rates, Maturity & When to Use It
When an FCNR(B) deposit beats an NRE FD — how foreign-currency fixed deposits work for NRIs, RBI interest rate regulations, premature withdrawal rules, and tax treatment.
What Is an FCNR(B) Account?
A Foreign Currency Non-Resident (Bank) — or FCNR(B) — deposit is a fixed deposit held in a foreign currency in an Indian bank. Unlike NRE fixed deposits (which hold Indian Rupees), your FCNR deposit is denominated in the currency you deposit — so there is no exchange rate risk on the principal. If you deposit $10,000, you get back $10,000 + interest at maturity, regardless of what the USD/INR rate does.
Eligible Currencies
RBI permits FCNR deposits in 12 currencies: USD, GBP, EUR, CAD, AUD, JPY, SGD, CHF, HKD, SEK, DKK, and NOK. Most Indian banks actively accept USD, EUR, GBP, CAD, and AUD; other currencies may be available on request.
Who Can Open an FCNR(B) Account?
Only NRIs and PIOs/OCI cardholders can open FCNR deposits — resident Indians cannot. You open it with an Indian bank while already holding NRE/NRO accounts. The deposit is linked to your NRE account for repatriation purposes.
Tenure and Interest Rates 2026
FCNR deposits must be held for a minimum of 1 year and maximum of 5 years. RBI regulates the maximum interest rate (LIBOR/SOFR + spread); actual rates vary by bank.
| Bank | USD 1-year | USD 3-year | EUR 1-year | GBP 1-year |
|---|---|---|---|---|
| SBI | ~5.3% | ~5.1% | ~3.2% | ~4.5% |
| HDFC | ~5.4% | ~5.2% | ~3.3% | ~4.6% |
| ICICI | ~5.35% | ~5.15% | ~3.25% | ~4.55% |
| Axis | ~5.2% | ~5.0% | ~3.0% | ~4.4% |
Compare these to equivalent US T-bills or Euro savings rates when deciding whether FCNR is competitive.
FCNR vs NRE FD
- Currency risk: FCNR has none (held in foreign currency). NRE FD is held in INR — if INR depreciates, your effective foreign-currency return falls.
- Rate: NRE FD rates (7–8% on INR) look higher, but factor in the historical ~3–4% annual INR depreciation. FCNR at 5.3% USD may match or beat a 7.5% NRE FD on a real return basis.
- Flexibility: NRE FD can be opened for shorter tenures (7 days+). FCNR requires minimum 1 year.
Tax Treatment
FCNR interest is fully exempt from Indian income tax — same as NRE accounts. On repatriation to your host country, interest may be taxable there (e.g., UK, US, Germany tax foreign interest income). Use DTAA provisions to avoid double taxation.
Premature Withdrawal
Early withdrawal is permitted but attracts a penalty — typically a 1% reduction from the applicable interest rate for the period held. If withdrawn before 1 year, no interest is paid at all (only principal returned).
When FCNR Makes Sense
FCNR is the right choice when: (1) you expect INR to depreciate significantly, (2) you will need the funds back in foreign currency (not rupees), or (3) you want to park a lump sum (bonus, property sale) safely earning foreign-currency interest. If you plan to use the funds in India, an NRE FD is simpler.
Compare live NRE/NRO and FCNR rates across SBI, HDFC, ICICI, and Axis with the Banking Guide on NRI Tools.