HDFC Bank has increased the interest rate on its three- to five-year Foreign Currency Non-Resident (Bank), or FCNR(B), US dollar deposits by 25 basis points, raising the rate from 6.00 per cent to 6.25 per cent with effect from August 1. The move comes as banks intensify efforts to attract foreign currency deposits under the Reserve Bank of India’s concessional swap scheme, which is aimed at strengthening foreign exchange inflows.
FCNR(B) deposits have emerged as the largest contributor to the ongoing mobilisation drive, accounting for approximately 36.7 billion US dollars in inflows. Additional funds have also been raised through Overseas Foreign Currency Borrowings (OFCBs) and External Commercial Borrowings (ECBs). The total inflows under the current RBI facility have already exceeded the amount mobilised under the special FCNR(B) deposit scheme introduced in 2013, achieving the milestone in less than two months.
Industry experts expect banks to continue revising FCNR(B) deposit rates upward in the coming weeks as competition for non-resident deposits increases before the RBI’s concessional swap window closes at the end of September. The higher interest rates are expected to encourage greater participation from non-resident Indians while supporting the country’s foreign exchange reserves and enhancing liquidity in the banking system.
