Several banks have reduced their FCNR (B) deposit interest rates after the government’s deadline for the special swap window offer ended on August 31, 2026. The rate cuts have particularly been made in deposits of three to five years, which had higher interest rates after the Reserve Bank of India (RBI) announced a relief on hedging costs.
The RBI in June 2026 had announced that the government would bear the hedging cost on 3-5-year FCNR (B) deposits till September 30, 2026. After this relief, many banks increased interest rates on their 3 and 5-year Foreign Currency Non-Resident (FCNR (B) fixed deposits. After they cut their interest rates on these FDs, banks drew huge USD deposits through FCNR (B) deposits. As a result, the government advanced the deadline to August 31, 2026.
