As the Reserve Bank of India (RBI) announces its fifth bi-monthly monetary policy for the current financial year on Friday, the interest rate ceilings on Foreign Currency Non-Resident Bank deposits or FCNR (B) bring good news for NRIs.

RBI Governor Shaktikanta Das announced a decision to raise the interest rate ceilings for FCNR (B) deposits based on their tenors.

FCNR(B) deposits are accounts designed for NRIs to hold their earnings in foreign currencies such as USD or GBP, shielding them from exchange rate fluctuations.

“At present, interest rates on FCNR(B) deposits are subject to ceilings of Overnight Alternative Reference Rate (ARR) for the respective currency/swap, plus 250 basis points for deposits of 1 year to less than 3 years maturity and overnight ARR plus 350 basis points for deposits of 3 years and above and up to 5 years maturity,” said RBI.

“With effect from today (December 6, 2024), banks are permitted to raise fresh FCNR(B) deposits of 1 year to less than 3 years maturity at rates not exceeding ARR plus 400 bps and deposits with maturity between 3 to 5 years at rates not exceeding ARR plus 500 bps. This relaxation will be available till March 31, 2025,” RBI added.

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