HDFC Bank and Peers Raise FCNR Deposit Rates to 6% Following RBI Initiative

HDFC Bank, along with other major lenders, has increased interest rates on Foreign Currency Non-Resident (Bank) [FCNR(B)] deposits to 6% following the Reserve Bank of India's (RBI) decision to absorb hedging costs.  

This move aims to attract foreign currency inflows from non-resident Indians (NRIs). 

RBI's Forex Swap Facility Sparks Rate Hikes 

The RBI has operationalised a US dollar-rupee forex swap facility for fresh FCNR(B) deposits with maturities of 3 to 5 years. This has prompted major domestic banks to raise interest rates on these deposits.  

HDFC Bank, India's largest private sector lender, has increased FCNR(B) deposit rates by up to 260 basis points, now offering up to 6% on deposits in the 3- to 5-year maturity bucket. 

Other private sector lenders, such as Yes Bank and AU Small Finance Bank, have also hiked their FCNR(B) rates, offering as much as 7.10% on deposits in the same maturity range. 

RBI's Measures to Attract Foreign Capital 

The RBI's initiative includes absorbing the full hedging cost for authorised dealer banks raising fresh FCNR(B) deposits with maturities of 3 to 5 years.  

This allows banks to offer NRIs deposit rates at least 200 basis points higher than current levels.  

The swap facility is available for deposits mobilised in any freely convertible currency, with swaps undertaken in US dollars. 

Read More: RBI Proposes New Deposit Rate Rules to Improve Transparency and Flexibility! 

Potential Inflow Estimates and Regulatory Guidelines 

Potential FCNR(B) inflow estimates vary widely, ranging from $20 billion to over $40 billion. The RBI has stated that banks are free to price such deposits according to their internal policies, subject to existing regulatory ceilings.  

The swap facility is available for fresh FCNR(B) deposits mobilised in any freely convertible currency, including deposits renewed upon maturity, for a minimum tenor of 3 years and a maximum tenor of 5 years. 

HDFC Bank Share Price Performance  

As of June 10, 2026, at 2:34 PM, HDFC Bank share price on NSE was trading at ₹749.10 up by 1.46% from the previous closing price. 

Conclusion 

The RBI's decision to absorb hedging costs for FCNR(B) deposits has led to significant rate hikes by major banks, including HDFC Bank. This initiative aims to attract foreign currency inflows from NRIs by offering competitive deposit rates. The move is expected to bring substantial foreign capital into the Indian banking system. 

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