Bandhan Bank Increases FCNR(B) Deposit Rates to 7.1% After RBI Forex Swap Move

Why It Matters

Higher FCNR(B) rates give NRIs a more attractive avenue to park foreign earnings, while supporting RBI’s goal of strengthening foreign‑currency liquidity in Indian banks.

Key Takeaways

• Bandhan raises FCNR(B) rates to 7.1% for deposits ≥ $1M.
• Rates for deposits under $1M increased to 7.0%.
• RBI's USD‑rupee swap aims to boost foreign‑currency inflows.
• Higher rates attract NRIs seeking stable, long‑term returns.
• Offering mitigates currency risk amid potential rupee depreciation.

Pulse Analysis

The FCNR(B) scheme has long been a cornerstone for Non‑Resident Indians seeking to earn Indian‑linked returns without exposing their capital to exchange risk. By lifting rates to 7.1% for deposits of $1 million and above, Bandhan Bank is signaling confidence in its ability to source and manage foreign‑currency funding. The tiered structure—7.0% for balances under $1 million—aligns with market expectations and positions the bank competitively against peers that have been slower to adjust rates.

The Reserve Bank of India's recent rollout of a USD‑rupee forex swap facility for fresh FCNR(B) deposits is a strategic response to persistent capital outflows and rupee pressure. By offering banks a mechanism to hedge foreign‑currency exposure, the RBI aims to encourage longer‑tenor inflows, improve liquidity, and stabilize the exchange market. This policy shift reduces the cost of foreign‑currency funding for banks, enabling them to pass on more attractive yields to NRI customers, as demonstrated by Bandhan's rate hike.

For NRIs, the enhanced rates provide a compelling blend of higher returns and currency risk mitigation, especially as analysts forecast potential rupee depreciation amid global monetary tightening. Banks that can efficiently channel these deposits into productive lending will benefit from a broader, more stable funding base. Bandhan's proactive stance may attract a larger share of the NRI deposit pool, reinforcing its balance sheet and supporting its growth ambitions in a market where foreign‑currency liquidity is increasingly prized.