RBI FCNR(B) Swap Window Closes 30 Sept 2026: NRI Action Guide
RBI's special FCNR(B) swap window, open since June 2026, lets banks offer NRIs USD deposit rates of up to 7.10% instead of the usual 3.5%. The window shuts on 30 September 2026 — deposits booked before that date keep the locked-in rate for their full tenure.
CA Harun Raaj
Chartered Accountant · Harun Raaj & Associates
Legal basis: Foreign Exchange Management Act 1999, Section 6(5) (FCNR(B) deposit accounts for persons resident outside India), operating alongside the RBI's special FCNR(B) swap scheme — Effective: 8 June 2026 to 30 September 2026. Source: RBI circular (reported via business-standard.com; the specific circular number has not been independently verified against rbi.org.in and readers should check the official RBI text before relying on exact provisions). Last reviewed by CA Harun Raaj: September 2026.
The Reserve Bank of India opened a special FCNR(B) swap window on 8 June 2026. It closes on 30 September 2026 — just eight days from today. For NRIs holding US dollar savings, this is one of the most favourable FCNR(B) deposit windows India has offered in years, and once it shuts, the rates on offer are unlikely to hold.
What the swap window actually does
Normally, when an Indian bank accepts a foreign currency FCNR(B) deposit, it must hedge the currency exposure at its own cost — typically 3 to 3.5 percentage points a year. That hedging cost eats directly into the interest rate the bank can afford to pay depositors. Under the June 2026 scheme, the RBI absorbs the hedging cost instead, and banks pass the saving on to depositors as higher rates.
The result: FCNR(B) deposit rates have moved from roughly 3.5% USD to a range of 6.25–7.10% USD, with no change in the underlying deposit risk for the account holder.
Indicative rates during the window (September 2026)
Rates are indicative and change frequently. Confirm current rates with your bank's NRI desk before booking.
Key point: NRIs who book an FCNR(B) deposit before 30 September 2026 lock in swap-window rates for the full deposit tenure, even after the window itself closes to new bookings.
The tax position
Interest on FCNR(B) deposits is fully exempt from Indian income tax under Section 10(4)(ii) of the Income Tax Act 1961, with no TDS deducted, for as long as the depositor maintains NRI status. FCNR(B) is a foreign currency account, so principal and interest can be freely remitted abroad at maturity without separate FEMA approval or RBI permission.
What FCNR(B) is, briefly
FCNR stands for Foreign Currency Non-Resident (Bank). Key features relevant to this window:
- Maintained in foreign currency — USD, GBP, EUR, JPY, AUD or CAD.
- Standard tenure ranges from 1 to 5 years; the RBI swap scheme requires a minimum 3-year tenure for swap eligibility.
- No premature withdrawal is permitted within the first year.
- Permitted for NRIs under FEMA 1999, Section 6(5).
Who this suits, and who should pause
Gulf-based NRIs earning in USD, with no home-country income tax and Indian-tax-free FCNR interest, are the clearest beneficiaries of this window. US and UK residents should get country-specific advice before committing, since Indian tax exemption does not override reporting or tax obligations abroad.
After 30 September 2026
Once the swap window closes, banks revert to bearing their own hedging costs, and rates are expected to fall back toward the 3.5–4% range that prevailed before June 2026. Deposits booked before 30 September 2026 keep their locked-in rate for the entire agreed tenure — the window's benefit is captured at booking, not renewed.
Action checklist
- Confirm your NRI status and that the account is structured as Non-Resident External / FCNR(B).
- Compare rates across banks for your preferred tenure — 3, 4 or 5 years.
- Contact your bank's NRI desk now; booking must complete before 30 September 2026.
- If you are a US or UK tax resident, consult your home-country tax adviser before committing funds.
- Keep a Tax Residency Certificate from your country of residence on file.
I'm CA Harun Raaj, Visakhapatnam.
If you're an NRI weighing an FCNR(B) deposit before this window closes, or need help sorting the Indian and home-country tax angles, reach out to us before 30 September 2026.
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See Also
Frequently Asked Questions
What is the RBI FCNR(B) swap window and when does it close?
It is a special scheme opened by the RBI on 8 June 2026 under which the RBI absorbs the currency hedging cost banks normally bear on FCNR(B) deposits, allowing banks to offer higher USD rates. The window closes for new deposits on 30 September 2026.
Is FCNR(B) interest taxable for NRIs in India?
No. FCNR(B) interest is fully exempt from Indian income tax under Section 10(4)(ii) of the Income Tax Act 1961, with no TDS deducted, as long as the depositor maintains NRI status.
Can US or UK resident NRIs book FCNR(B) deposits without home-country tax issues?
The Indian tax exemption does not apply abroad. FCNR(B) interest is taxable in the United States and may require FBAR/FATCA disclosure, while UK remittance-basis residents should check whether remitted interest triggers a UK charge. Consult a qualified adviser in your country of residence before booking.
What is the minimum deposit tenure to qualify for the RBI swap scheme rates?
Standard FCNR(B) tenures range from 1 to 5 years, but the RBI's swap scheme requires a minimum 3-year tenure for a deposit to qualify for swap-window eligibility and the associated higher rates.
What happens to FCNR(B) rates after 30 September 2026?
Once the window closes, banks revert to bearing their own hedging costs, and rates are expected to fall back toward the 3.5–4% range seen before June 2026. Deposits booked before 30 September 2026 retain their locked-in rate for the full tenure.
Do I need RBI or FEMA approval to repatriate FCNR(B) proceeds?
No. FCNR(B) is a foreign currency account permitted under FEMA 1999, Section 6(5), and principal plus interest can be freely remitted abroad at maturity without separate FEMA approval or RBI permission.
Is premature withdrawal allowed on an FCNR(B) deposit?
No premature withdrawal is permitted within the first year of an FCNR(B) deposit under the scheme's standard terms.
Which banks currently offer the highest FCNR(B) rates during the window?
Indicative rates as of September 2026 include AU Small Finance Bank at 7.10% for 3–4 year tenures, IDFC FIRST Bank at 6.75% for 5 years, and HDFC Bank and ICICI Bank at 6.25% for select tenures. Confirm current rates with each bank's NRI desk before booking.
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