Quick Summary
Something big just happened for NRI investors. In the span of just three days June 5 to June 8, 2026 the RBI pushed through two major changes at once: one loosening equity investment limits, the other reworking NRI fixed deposit rates. Put together, it’s arguably the biggest opening up of NRI investment access India has seen in over a decade. Here’s what actually changed, how each part works and what you should do about it.
Part 1: NRI Fixed Deposit Rates Are Back: FCNR(B) Hits 7.1%
What happened
On June 8, 2026, the RBI introduced a special US Dollar-Rupee Forex Swap Facility for fresh FCNR(B) deposits via Circular RBI/2026-27/99. NRIs can now earn up to 7% per annum on dollar fixed deposits no currency risk, no Indian tax on the interest. This is not a routine rate tweak. The last time India ran a comparable scheme was in 2013 and it pulled in $34 billion from the NRI community within months.
What is an FCNR(B) deposit and how is it different from a regular NRE FD?
Most NRIs are familiar with NRE fixed deposits. You send money from abroad, it gets converted to rupees, earns interest in rupees, and you convert back to your currency when you withdraw. The exchange rate at the time of withdrawal determines what you actually get back. That’s rupee risk.
An FCNR(B) deposit is fundamentally different. It is a term deposit maintained in foreign currency. Unlike a rupee fixed deposit, the money is held in a permitted foreign currency and the maturity proceeds are also payable in that currency. If your savings are already in USD, GBP, EUR, AUD or another permitted currency, this structure helps you avoid the back-and-forth conversion into Indian rupees.
In plain terms: you deposit dollars, you get dollars back at maturity. The rupee’s movement over those 3-5 years does not affect your principal or interest. That currency risk sits with the RBI, not with you.
Why are rates suddenly so high?
Under the scheme, authorised dealer banks can mobilise fresh FCNR(B) deposits for a period of three to five years and swap the underlying foreign currency with the RBI. The central bank will undertake the swap at par, meaning banks can sell dollars to the RBI and buy them back at the same exchange rate at maturity. By providing a dedicated swap facility, RBI effectively reduces that burden, creating room for banks to offer more competitive FCNR(B) rates.
The deposits mobilised under the special scheme are also exempt from cash reserve ratio (CRR) and statutory liquidity ratio (SLR) requirements. Together, these changes lower the cost for banks of raising foreign currency funding and encourage lenders to raise rates to attract incremental NRI deposits. Banks across the sector responded quickly, with lenders raising FCNR(B) rates by 200-300 basis points, moving headline rates to 6-7%.
Current bank-wise rate comparison
As of June 11, 2026, AU Small Finance Bank is offering 7.10% on three to four-year USD FCNR(B) deposits. Punjab National Bank is at 6.10%. HDFC Bank, ICICI Bank, and Axis Bank are all offering 6.00% across three to five year tenors. SBI is offering 5.25% for shorter tenors and up to 6% on five-year deposits for standard amounts. This bank-wise spread gives you a clear picture of where NRI fixed deposit rates currently stand across major lenders.
ICICI Bank stated on its website that it is offering 6.50% interest on NRI fixed deposits effective June 11, following the RBI’s announcement of the swap window. Yes Bank is offering interest rates in the 6.50-6.60% range for such deposits, underscoring that some private lenders are pricing above public sector peers.
How does this compare to US Treasuries?
5-year US Treasuries yield approximately 4.3%, so some FCNR(B) offers a nearly 3 percentage point premium. The scheme is backed by the RBI’s balance sheet, making the banks’ risk position very strong.
That gap is meaningful. You are earning more, in the same currency, with no exchange rate risk, and no Indian income tax on the interest earned.
Key terms: window dates, lock-in, tax treatment
Deposits must be opened between June 8 and September 30, 2026. Banks can access the RBI swap facility until October 16, 2026. Deposits carry a one-year lock-in from the date of opening. After one year, banks may allow premature withdrawal based on their internal policy. Swaps already executed with the RBI cannot be cancelled, even if a depositor withdraws early.
The deposits are also exempt from tax in India for eligible NRI and OCI investors, although taxation in the country of residence may still apply. Financial planners say investors should compare the final post-tax return with alternatives such as US Treasury securities, bank certificates of deposit and money market funds before making a decision.
Note for US-based NRIs (FBAR/FATCA)
For US-based NRIs specifically: the interest may be tax-free in India but you will likely still need to report it under FBAR and FATCA rules if your foreign balances cross $10,000. Speak to a CPA before proceeding.
The window closes September 30, 2026. This is a time-limited opportunity.
Part 2: Equity Investment Limits Doubled
What changed (individual 5%-10%, aggregate 10%-24%)
The Reserve Bank of India doubled the equity investment limits for NRIs and OCIs on June 5, 2026. RBI Governor Sanjay Malhotra announced the change on the last day of the monetary policy meeting. As an individual investor, you can now hold up to 10% of a listed company’s paid-up capital, up from 5%. All NRI and OCI investors together can hold up to 24% of a company, up from 10%. You do not need to register with the market regulator SEBI to use this route.
What this means in practice
For most retail NRI investors with holdings spread across multiple companies, the individual 10% cap was never the binding constraint. The more impactful change is the aggregate limit.
Under the old framework, some companies would eventually hit the aggregate NRI ownership ceiling. Once that happened, banks could stop processing fresh NRI purchases in those shares. This occasionally created hurdles for overseas investors who wanted to buy stocks that remained fundamentally attractive. With the threshold now raised to 24%, fewer companies are likely to reach the ceiling. As a result, overseas investors should have access to a wider universe of stocks.
For high-conviction investors who want to build meaningful positions in specific companies, the individual limit change matters too. Consider an entrepreneur based in Singapore who wants to increase investment in a listed engineering company with a paid-up capital of ₹300 crore. Under the earlier framework, his holding could not exceed 5% of the company. Following the RBI’s announcement, he can build a stake of up to 10%, subject to other applicable regulations. That gives him far greater flexibility if he has a strong conviction in the business.
Who else benefits
The Ministry of Finance said individual PROIs (Persons Resident Outside India) would be permitted to invest in listed Indian companies through the Portfolio Investment Scheme, a route previously available only to NRIs and OCIs. The proposal was first announced in the Union Budget for 2026-27. This means foreign nationals who are not of Indian origin can now access the same simplified investment route that was previously exclusive to NRIs and OCI cardholders.
No new paperwork needed
The route itself does not change. You still buy on a repatriation basis through an NRE account if you want to move the money abroad later, or on a non-repatriation basis through an NRO account. The same FEMA rules on reporting and fund transfers apply and capital gains tax on your Indian stock sales stays exactly where it was.
Part 3: The Broader Package
The equity limit increase and FCNR(B) window did not arrive in isolation. The relaxation for NRI and overseas investors was announced alongside several other measures aimed at attracting foreign funds. The RBI expanded the universe of government securities available under the Fully Accessible Route (FAR), removed certain investment restrictions for foreign investors, and introduced temporary incentives for external commercial borrowings (ECBs) and FCNR(B) deposits.
Anil Bamboli, Head of Fixed Income at HDFC Asset Management Company, said the RBI’s measures to broaden foreign investor access, including the expansion of the FAR framework, should enhance the attractiveness of Indian government securities and support capital inflows, thereby helping ease pressure on the rupee.
The FAR expansion is specifically relevant for NRIs interested in Indian government bonds. New 15-, 30-, and 40-year G-secs are now included in the Fully Accessible Route, meaning foreign investors can buy these long-duration securities without any investment cap. This deepens the investable universe for NRIs who want bond exposure to India alongside equity exposure.
Part 4: Why Is India Doing This?
Foreign portfolio investors have pulled out a record ₹2.63 trillion from Indian equities so far in calendar year 2026, according to exchange data. Domestic institutional investors have offset much of the selling with purchases exceeding ₹4 trillion.
India needs stable, long-term foreign capital to replace the volatile FPI flows it has been losing. NRIs and OCIs are historically a more stable source of that capital they invest in India because they understand it, believe in it, and often have long-term ties to it. The policy package of June 2026 is designed to make it easier, more attractive, and more rewarding for this community to bring more capital home.
Dhiraj Relli, Managing Director and CEO of HDFC Securities, said: ‘The liberalisation of investment norms for NRIs, OCIs, and other overseas individuals strengthens India’s capital account at a time when external financing conditions remain dynamic, while also supporting rupee stability.’
What Should NRIs Do Now? (Checklist)
If you are an NRI with dollar savings and you want to explore the FCNR(B) opportunity:
- Ensure you have an active NRE or NRO account at an Indian bank. You cannot open an FCNR(B) deposit without an existing NRI banking relationship.
- Contact your bank to confirm the current NRI fixed deposit rates on offer rates are set by individual banks and can change before September 30.
- Understand the lock-in, you cannot access your money freely for at least one year, and in some cases the bank’s internal policy may be stricter.
- If you are US-based, consult a CPA on FBAR, FATCA, and US tax treatment of the interest before proceeding.
- Do not wait until late September, when rate competition between banks is happening now, and the best rates may not persist all the way to the deadline.
If you are an NRI interested in Indian equities:
- Your existing NRE account and demat setup are all you need no additional SEBI registration is required up to the new 10% individual limit.
- The aggregate 24% limit means more mid-cap and small-cap stocks will remain accessible to NRI buyers without hitting the ceiling.
- NRI shareholding in NSE-listed companies currently stands at just 0.62% of total market value against a total market cap of ₹461 lakh crore. The headroom for NRI participation to grow is significant.
Conclusion
India is actively and deliberately making itself a more attractive destination for NRI capital. NRI fixed deposit rates as high as 7.1%, with no currency risk and no Indian tax. Doubled equity limits with no additional registration. A broadened framework that now includes all overseas individuals, not just NRIs and OCIs.
The window for elevated NRI fixed deposit rates closes September 30, 2026. The equity limit changes are permanent. Both deserve your attention.
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