HDFC and ICICI Bank Raise FCNR FD Interest Rates by 0.25%
There is great news for Non-Resident Indians (NRIs) who earn and save in foreign currencies. Two of India’s leading private banks, HDFC Bank and ICICI Bank, have increased the interest rates on Foreign Currency Non-Resident (FCNR) Fixed Deposits by 0.25%. This move allows NRIs to earn higher tax-free returns on their foreign currency deposits without worrying about exchange rate fluctuations between the US dollar and the Indian rupee.
This interest rate hike makes FCNR fixed deposits even more attractive for Indians living and working overseas who want to keep their savings secure while earning better returns.
Why Have the Banks Increased Interest Rates?
The increase is not a random decision by the banks. It follows a major relief announced by the Reserve Bank of India (RBI).
In June 2026, the RBI decided that the hedging cost associated with FCNR deposits of three to five years would be borne by the government until September 30, 2026. Hedging costs are expenses that banks incur to protect themselves from foreign currency exchange rate fluctuations.
Since the banks no longer have to bear these costs during this period, both HDFC Bank and ICICI Bank have passed the benefit on to their customers by increasing FCNR FD interest rates by 0.25%.
HDFC Bank FCNR FD Interest Rates
HDFC Bank implemented its revised FCNR interest rates from August 1, 2026.
The updated rates are:
- 3 to 5 years: 6.25%
- 1 to 2 years: 3.50%
- 2 to 3 years: 3.25%
The bank has also announced that FCNR deposits opened between June 10, 2026, and September 30, 2026, with a tenure of three to five years, will have a one-year lock-in period. During this time, withdrawals will not be allowed.
Customers opening an FCNR deposit through NetBanking should note that the deposit may take up to two working days to become active.
ICICI Bank FCNR FD Interest Rates
ICICI Bank introduced its revised FCNR deposit rates from August 3, 2026.
The new rates are:
- 6.25% for deposits of USD 400,000 or more with a tenure of 3 to 5 years.
- 6.00% for deposits below USD 400,000 for the same tenure.
- 3.85% for deposits with a tenure of 1 to 3 years.
These revised rates provide NRIs with a competitive opportunity to maximize returns while keeping their funds in foreign currency.
Premature Withdrawal Rules
ICICI Bank has also clarified the premature withdrawal policy for FCNR deposits.
For 1 to 3-year deposits, if funds are withdrawn before completing 12 months, no interest will be paid. Withdrawals made after 12 months will receive the applicable interest without any penalty.
For 3 to 5-year deposits, a one-year lock-in period applies. If the deposit is closed after the lock-in period but before maturity, the bank will deduct a 1% penalty, and the remaining interest will be calculated based on the actual period the deposit remained with the bank.
Why This Matters for NRIs
The revised FCNR FD rates offer a valuable opportunity for NRIs to earn higher tax-free returns while avoiding foreign exchange risks. Since FCNR deposits are maintained in foreign currencies, investors do not have to worry about fluctuations in the value of the Indian rupee.
For Indians living abroad, this rate hike by HDFC Bank and ICICI Bank makes FCNR Fixed Deposits one of the safest and most rewarding short-term investment options currently available.
