InvestmentSep 22, 2026

FCNR(B) Deposit Complete NRI Guide 2026 - Rates, Tenures, Tax-Free Interest (Section 10(4)), Currency Risk, USD/GBP/EUR Banks Compared

Foreign Currency Non-Resident Bank (FCNR-B) deposits let NRIs hold Indian bank deposits in USD/GBP/EUR/AUD/CAD/SGD without rupee-conversion risk. Interest is tax-free in India under Section 10(4) and both principal + interest are fully repatriable. This 2026 guide covers rates, tenures (1-5 years), tax treatment, comparison with NRE, currency-risk analysis and bank-by-bank features.

By NRI Globe Editorial

Sep 22, 20266 min readFact-checked

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Key Takeaways

Held in foreign currency - not INR (unlike NRE FD)
Term deposits only - typically 1 to 5 years
Tax-free interest in India under Section 10(4)
Fully repatriable principal + interest, no annual limit
Zero currency conversion risk - deposit stays in USD/GBP/EUR/AUD/etc.

FCNR(B) (Foreign Currency Non-Resident Bank) deposits let NRIs hold Indian bank fixed deposits in foreign currency - typically USD, GBP, EUR, AUD, CAD, SGD, JPY, HKD - without converting to Indian rupees. Both principal and interest are held and returned in the same foreign currency, eliminating rupee-depreciation risk.

Interest is tax-free in India under Section 10(4) of the Income Tax Act. Both principal and interest are fully repatriable with no annual limit. For NRIs seeking a safe, currency-protected rupee-bank product, FCNR(B) is one of the most attractive options.

FCNR(B) framework, Section 10(4) tax exemption and free repatriability are established RBI + IT Act provisions. Specific 2026 rate ranges reflect current reporting - always verify current rates on your bank's NRI page and RBI Master Direction on Deposits.

What is FCNR(B) Deposit?

FCNR(B) is a bank fixed deposit held in a designated foreign currency. Key features:

Held in foreign currency - not INR (unlike NRE FD)
Term deposits only - typically 1 to 5 years
Tax-free interest in India under Section 10(4)
Fully repatriable principal + interest, no annual limit
Zero currency conversion risk - deposit stays in USD/GBP/EUR/AUD/etc.

Eligible Currencies for FCNR(B) (2026)

Reserve Bank of India permits FCNR(B) deposits in freely convertible currencies. Common accepted currencies at major banks:

US Dollar (USD)
Pound Sterling (GBP)
Euro (EUR)
Australian Dollar (AUD)
Canadian Dollar (CAD)
Singapore Dollar (SGD)
Japanese Yen (JPY)
Hong Kong Dollar (HKD)
Swiss Franc (CHF) - some banks
Danish Krone / Swedish Krona - select banks

Rates & Tenures (Approximate 2026)

FCNR(B) rates are typically lower than NRE FD rates because they carry no rupee-currency risk. Approximate current ranges:

Currency	1-2 Year	3-5 Year
USD	~4.0-5.0%	~4.5-5.5%
GBP	~3.5-4.5%	~3.5-4.5%
EUR	~2.0-3.0%	~2.0-3.0%
AUD	~3.5-4.5%	~3.5-4.5%
CAD	~3.0-4.5%	~3.0-4.5%

Rates vary by bank and are updated monthly/weekly. Verify current published rates on each bank's NRI deposit page.

Tax Treatment for NRIs

Section 10(4) - interest fully exempt from Indian income tax
No TDS deducted by bank
Not reportable on Indian ITR while non-resident under FEMA
Home country tax: US, UK, Canada, Australia typically tax worldwide interest income - FCNR interest is fully taxable in those countries even though tax-free in India
US NRIs: Report on Form 1040 (worldwide income), FBAR (if aggregate > USD 10k), Form 8938 (FATCA)
Foreign Tax Credit: Not applicable since India charges 0 tax on FCNR

FCNR(B) vs NRE FD - Which to Choose?

Feature	FCNR(B)	NRE FD
Currency	USD/GBP/EUR (kept in foreign currency)	INR (converted from foreign)
Interest Rate (2026 approx)	~4.0-5.5% (USD)	~6.5-8.5%
Tax in India	Tax-free (Section 10(4))	Tax-free (Section 10(4))
Currency Risk	None (returns in same currency)	Rupee depreciation vs USD/GBP/EUR
Repatriation	Fully free, no limit	Fully free, no limit
Best For	Currency protection, USD earners	Higher INR yield if rupee stable

Rule of Thumb

If you plan to bring money back to your home country in 1-5 years: choose FCNR(B)
If you plan to eventually settle in India: choose NRE FD for higher rupee yield
Diversify: split 50/50 for balance

FCNR(B) at Major Indian Banks (2026)

HDFC Bank - Strong online interface, 8 currencies, competitive USD rates
ICICI Bank - Widest currency selection (10+ currencies), video KYC, strong NRI app
SBI (State Bank of India) - Government backing, extensive global branches, PAT (partial repatriation) allowed
Kotak Mahindra - Premium NRI service, tech-forward digital interface
Axis Bank - Competitive rates, strong North America NRI desk
IndusInd - Sophisticated wealth-management pairing
Yes Bank, Federal Bank, IDBI - Alternative choices with occasional rate promotions

Compare current published rates at each bank's NRI deposit page before booking. Rate differences of 0.5-1.0% can materially affect returns on larger deposits.

How to Open an FCNR(B) Deposit

Open an NRE savings account as your parent NRI banking relationship
Complete KYC (passport, visa/OCI, foreign address proof, PAN)
Fund the FCNR deposit via:
- Wire transfer from your overseas bank account
- Transfer from your NRE account (bank converts INR back to foreign currency at market rate)
- Transfer from another FCNR account
Choose currency + tenure (1/2/3/4/5 years) + interest payout (cumulative on maturity vs quarterly)
Book online via bank's NRI net-banking or through relationship manager
Receive FDR (Fixed Deposit Receipt) - keep safely for maturity claim

Premature Withdrawal Rules

Allowed but subject to bank-specific penalties
Typical penalty: reduction of 0.5-1.0% from applicable rate for the completed tenure
Some banks require deposit to have completed at least 1 year before allowing premature closure
Foreign currency conversion loss may apply if breaking early
Always confirm penalty terms in deposit contract

Common Use Cases

US NRI: Park USD earnings at ~4.5% tax-free (India) vs ~4.0% CD in US bank
UK NRI: GBP deposits at ~4% - similar to UK ISA but Indian bank backed
Middle East NRI: Convert AED/QAR earnings to USD via FCNR for USD yield
Retirement bridge: 5-year FCNR ladder to fund India retirement without currency risk
Children's education fund: USD/GBP FCNR for USA/UK college abroad

The Special RBI FCNR Window 2026

Per reported RBI data (mid-2026), a special FCNR(B) swap window reportedly attracted approximately $132.98 billion from the Indian diaspora - one of the largest single-window FCNR mobilisations. This reflects strong NRI confidence in India's currency-protected products and favourable hedging arithmetic.

See our Major NRI News This Week for the latest FCNR window developments.

FAQ

Is FCNR(B) interest tax-free in India?

Yes - Section 10(4) of Income Tax Act. No TDS. However, home-country tax may apply (US/UK/Canada tax worldwide income).

Can I open FCNR from USA/UK online?

Yes. All major Indian banks offer online FCNR booking through their NRI net-banking. Some require initial branch KYC; most now support video KYC.

What is the minimum FCNR deposit amount?

Typically USD 1,000 or GBP 1,000 (bank-specific). No official RBI minimum for account holders.

Can I break FCNR before maturity?

Yes but with penalty. Typical: 0.5-1.0% rate reduction. Some banks require 1-year minimum completion before premature closure.

Is FCNR safer than NRE?

Both are safe as they're held at RBI-regulated banks with DICGC deposit insurance up to ₹5 lakh (INR equivalent). FCNR removes rupee-depreciation risk; NRE keeps INR interest higher.

Can I have FCNR in multiple currencies?

Yes. You can hold FCNR deposits in different currencies simultaneously - e.g., USD 50k + GBP 30k + EUR 20k across separate FDRs.

Trusted Sources

RBI.org.in - FEMA Master Direction on Deposits
Individual bank NRI pages - HDFC/ICICI/SBI/Kotak/Axis published FCNR rate schedules
Incometax.gov.in - Section 10(4) provisions
Cross-border tax advisor for US/UK home-country reporting

Disclaimer: Informational only, not investment/tax/legal advice. Rates and rules change - verify current rates on your bank's NRI page and RBI.org.in. Consult qualified CA + cross-border tax advisor.