Equitas SFB Hikes USD FCNR(B) Rates to 7.13% for NRIs

Equitas Small Finance Bank Limited has announced a significant upward revision in interest rates for its Foreign Currency Non-Resident (FCNR) Bank deposits. Effective immediately, Non-Resident Indians (NRIs) can now earn an annual interest rate of 7.13% on USD-denominated FCNR(B) deposits for tenures ranging from three to five years.

This strategic adjustment follows the Reserve Bank of India’s (RBI) recent decision to introduce a special FCNR(B) swap facility, designed to encourage higher inflows of foreign currency into the Indian banking system. By absorbing the costs associated with currency hedging, the central bank’s initiative has allowed domestic lenders to offer more competitive yields on foreign currency deposits.

Capitalizing on the RBI Swap Window

The hike to 7.13% is part of a broader industry trend triggered by the central bank's June 2026 circular. The RBI’s facility, available for deposits mobilized between June 8 and September 30, 2026, aims to bolster foreign exchange reserves and provide NRIs with attractive alternatives to traditional savings vehicles.

According to bank filings submitted to the National Stock Exchange (NSE), Equitas Small Finance Bank is positioning this product as a "best-in-class" solution for NRIs looking to preserve the value of their overseas earnings. The deposits carry a mandatory one-year lock-in period, and they provide investors with a hedge against currency fluctuations while maintaining the tax-free status of interest income within India, subject to prevailing regulatory guidelines.

Strategic Benefits for NRIs

For investors, the product offers a combination of stability and liquidity. Because the principal and interest are maintained in US Dollars, depositors are protected from the volatility of the Indian Rupee during the tenure of the investment.

Murali Vaidyanathan, Country Head – Liabilities at Equitas Small Finance Bank Limited, noted the appeal of this offer in the current economic climate. "NRIs today are increasingly looking for solutions that protect the value of their overseas earnings," Vaidyanathan said. "Insulating against currency volatility along with assured returns is the best combination. With our best-in-class 7.13% rate on USD FCNR(B) deposits, Equitas is well positioned to offer NRIs a compelling combination of return, stability, and flexibility."

Impact on Investors and Markets

The move is expected to attract significant interest from the global Indian diaspora, particularly those seeking to diversify their portfolios away from low-interest savings accounts in Western markets. With the RBI-backed swap facility facilitating these higher rates, the FCNR(B) segment has become a critical battleground for banks competing for NRI funds.

For businesses and the broader economy, the influx of these deposits contributes to liquidity in the banking sector and reinforces the country’s foreign exchange buffers. Investors are advised, however, to consult with cross-border financial advisors to evaluate their specific tax liabilities in their country of residence, such as the United States, where interest income may remain subject to local taxation.

Key Facts at a Glance

• Revised Interest Rate: 7.13% per annum on USD FCNR(B) deposits.

• Tenure: Applicable for deposits with tenures between 3 and 5 years.

• Regulatory Support: The rate increase is facilitated by the RBI’s special swap facility active until September 30, 2026.

• Lock-in Period: A mandatory one-year lock-in applies to all fresh FCNR(B) deposits booked under this scheme.

• Eligibility: Exclusive to Non-Resident Indian (NRI) account holders.

FAQ

What is an FCNR(B) deposit?

An FCNR(B) deposit is a fixed deposit account for Non-Resident Indians held in foreign currencies (like USD, GBP, or EUR). It allows NRIs to keep their savings in a foreign currency while earning interest in India.

Why are interest rates on these deposits higher now?

The Reserve Bank of India recently opened a special swap window that allows banks to hedge the currency risk more cheaply. Banks are passing this benefit on to depositors to attract more foreign currency inflows.

Are these earnings tax-free?

Interest earned on FCNR(B) deposits is generally tax-free in India for NRIs. However, depositors should check tax laws in their country of residence, as the income may be reportable and taxable there.

Is this offer available for long-term investments?

Yes, the 7.13% rate is applicable for tenures between 3 and 5 years, providing a stable, high-yield option for long-term NRI savings.

Summary: 

Source: National Stock Exchange (NSE) Corporate Filing, Reserve Bank of India (RBI)