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PNB and Ujjivan Increase Foreign Currency Deposit Rates Amid Growing NRI Investment Interest

Non-Resident Indians (NRIs) looking to earn higher returns on their overseas savings may now have more attractive options in India. Several banks have started offering improved interest rates on Foreign Currency Non-Resident (Bank) [FCNR(B)] deposits, following recent measures announced by the Reserve Bank of India (RBI).

Among the lenders revising their rates are Punjab National Bank (PNB) and Ujjivan Small Finance Bank, both of which have enhanced returns on select FCNR deposit tenures. The move comes at a time when policymakers are aiming to attract more foreign currency inflows into the country and strengthen banking liquidity.

At the same time, domestic savers are also seeing new opportunities, with Bank of Baroda introducing a special fixed deposit scheme that offers competitive interest rates across customer categories.

PNB Revises FCNR Deposit Rates for Dollar Accounts

Punjab National Bank has announced higher interest rates on FCNR(B) deposits denominated in US dollars, making its offerings more appealing to NRI customers.

Under the revised structure, deposits with a tenure of three to four years will now earn an annual interest rate of 6.00%. Customers choosing a four- to five-year tenure will receive 6.05%, while deposits locked in for five years will fetch 6.10%.

The bank believes the revised rates will encourage overseas Indians to park a larger portion of their foreign earnings in India. FCNR deposits also provide an additional benefit by helping depositors avoid risks associated with fluctuations in exchange rates during the deposit period.

Ujjivan Small Finance Bank Offers Higher Yield Opportunities

Ujjivan Small Finance Bank has also upgraded its FCNR(B) deposit offerings, positioning itself among the more aggressive players in the market.

The bank is currently offering interest rates of up to 7.13% on FCNR deposits with maturities ranging from three to five years. This rate is notably higher than many conventional banking options available in the segment.

For NRIs seeking a balance between capital safety and attractive returns, such rates may provide an opportunity to maximize earnings on foreign currency deposits while maintaining exposure to India's banking system.

RBI Measures Driving Fresh Interest in Foreign Currency Deposits

The recent increase in FCNR deposit rates across banks follows a policy initiative introduced by the Reserve Bank of India.

The central bank recently announced a foreign currency swap facility aimed at encouraging banks to mobilize more overseas deposits. Industry experts believe the move could significantly improve foreign currency inflows into India over the coming months.

Market estimates suggest that the initiative has the potential to attract between $60 billion and $70 billion in fresh foreign capital. To capitalize on this opportunity, banks have begun offering more competitive rates to NRI customers.

Higher deposit rates not only make Indian banking products more attractive to overseas investors but also help financial institutions strengthen their foreign currency resources.

Bank of Baroda Launches Special Fixed Deposit Scheme

While FCNR deposits are primarily targeted at NRIs, domestic investors are also being offered new savings opportunities.

Bank of Baroda has launched a special fixed deposit product called the "BoB Golden Goal Deposit Scheme." The scheme comes with a tenure of 555 days and offers differentiated interest rates based on customer categories.

Under the plan:

• Regular customers can earn 6.75% interest.

• Senior citizens are eligible for 7.25%.

• Customers aged 80 years and above can receive 7.35%.

• Certain special deposit categories may offer returns as high as 7.40%.

The scheme is designed to attract savers looking for stable and predictable returns over a medium-term investment horizon.

What This Means for Depositors

The latest round of rate revisions reflects increasing competition among banks to attract both domestic and overseas deposits. For NRIs, higher FCNR rates can translate into improved earnings on foreign currency holdings without immediate exposure to currency conversion risks.

Meanwhile, domestic investors can also benefit from newly launched fixed deposit products that offer enhanced yields compared to standard savings options.

As banks continue to compete for deposits and RBI initiatives support foreign capital inflows, customers may find more rewarding opportunities in fixed-income products over the coming months. However, experts advise investors to compare tenure options, liquidity requirements, and tax implications before making a final investment decision.

For those seeking secure returns with minimal market risk, the current environment could offer some of the most attractive deposit rates seen in recent months.