RBI FCNR(B) Swap Window 2026: Guide for NRIs

Foreign currency deposits have come back into the NRI conversation, and this time the reason is not merely a rate card update. The Reserve Bank of India (RBI) has opened a US Dollar-Rupee swap facility for eligible Foreign Currency Non-Resident Bank [FCNR(B)] deposits mobilized by banks for 3 years to 5 years. For a Non-Resident Indian (NRI), this can sound a little too technical at first. The simpler reading is this: banks will have more room to offer attractive rates on eligible FCNR(B) deposits between tenures 3 years and 5 years

Simply put, RBI is not directly accepting deposits from NRIs. The deposit is still a bank deposit. The RBI facility sits behind the scenes, between RBI and Authorised Dealer Category-I banks. For you as an NRI, the more relevant parts are the currency, the tenure, the lock-in period, the rate offered by the bank and the rules for premature withdrawal.

Key Takeaways

• RBI's 2026 swap window applies to fresh or renewed FCNR deposits mobilised by banks for a minimum tenure of 3 years and a maximum tenure of 5 years, for deposits booked or renewed between 8 June 2026 and 30 September 2026.
• Premature withdrawal for FCNR(B) deposits booked under this scheme is not permitted in the first year. After the lock-in, withdrawal may be allowed at the bank’s discretion.
• Banks can price these deposits as per their internal policy, subject to the overall ceiling under RBI's extant guidelines.
• FCNR(B) deposits are maintained in foreign currency, so the principal and interest are not exposed to rupee conversion risk at maturity.
• The RBI swap window applies specifically to USD FCNR(B) deposits. Kotak Mahindra Bank’s revised USD rates under the scheme are effective 11 June 2026, with principal and interest fully repatriable.
• Rates and charges can change. You should check the live bank rate card before booking or renewing a deposit.

What An FCNR(B) Deposit Means For NRIs

An FCNR(B) deposit is a term deposit maintained in foreign currency by eligible non-resident customers. 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, EURO, AUD or another permitted currency, this structure helps you avoid the back-and-forth conversion into Indian rupees.

The attraction is fairly practical. You know the currency of the deposit. You know the tenure. You know the contracted rate, subject to the terms of the deposit. You also know that the principal and interest are fully repatriable, based on prevailing rules. For many NRI, especially those who still have future expenses outside India, that foreign-currency character is the point.

What RBI Has Announced For FCNR(B) Deposits and Why It Matters

Through its circular dated 8 June 2026, RBI introduced a US Dollar-Rupee forex swap facility for fresh FCNR(B) deposits mobilized for 3 years to 5 years.

When banks raise foreign currency deposits, they usually have to manage currency risk. Hedging that risk can carry a cost. In plain language, the bank mobilises eligible foreign currency deposits from customers, sells US dollars to RBI in the first leg of the swap and buys back the same amount at the end of the swap period.

The RBI circular states that the second leg will happen at the same rate as the first leg, which makes the swap an at-par arrangement, which is why FCNR(B) rates have suddenly become a more visible topic across banks. That is the bank-level part of the structure. The customer-facing part is simpler: the bank may be able to price eligible FCNR(B) deposits more attractively because the currency-management cost is lower.

This does not mean every FCNR(B) deposit will carry the same rate, nor does it mean every currency will be priced equally. Banks may revise rates differently depending on the currency, amount, tenure and their own funding requirements. The RBI facility creates room. The actual customer rate is still decided by the bank.

Here are some key points of this announcement:

Kotak FCNR(B) Deposit Options To Review

Kotak Mahindra Bank offers FCNR(B) deposits in USD, EURO, GBP, AUD and SGD. The deposit can be booked either by using funds in your NRE account, or by remitting money from your overseas bank account to Kotak’s NOSTRO account. Interest is compounded every 180 days for reinvestment deposits, subject to the minimum holding period.

For the 3-year to 5-year window, USD rates are naturally getting more attention because the RBI swap with banks is conducted in US dollars. Kotak's FCNR(B) interest rate page, effective 11 June 2026, shows the following USD rates for the RBI-window-relevant buckets.

These rates are subject to change. The safer practice is to treat any article as a guide to the framework, and the bank's live rate page as the place to confirm the rate before booking.

When An FCNR(B) Deposit May Fit An NRI Portfolio

An FCNR(B) deposit may be worth reviewing when your money is already in foreign currency and you do not want to convert it into rupees. It may also fit when you prefer a fixed deposit structure over a market-linked investment, or when you need the option to repatriate both principal and interest.

If liquidity during the tenure is a concern, an overdraft facility against the FCNR(B) deposit is worth discussing with the bank, so you can meet short-term needs without breaking the deposit. It may suit you less well if the funds are earmarked for rupee expenses soon, or if you prefer instruments that can be moved freely as rates change.

Checklist Before Booking An FCNR(B) Deposit

• Select a tenure of 3 to 5 years to access the revised rates under the RBI swap window.
• Check the latest rate for the selected currency, amount and tenure.
• Understand the terms and conditions related to the deposit booked under the RBI scheme (1-year lock-in from date of deposit creation, penalty charges for premature withdrawal after the lock-in period, etc)
• If booking from your funds in an international bank account, transfer it to Kotak’s respective NOSTRO account (depends on the currency in which you want to book the deposit)
• Instruct the bank to book the deposit using the funds (either already present in your NRE account or those that you sent to Kotak’s NOSTRO account). You can submit this request digitally, through email or net banking, or physically, by visiting your nearest branch. The deposit book request will ask you for maturity instructions and nominees.

Conclusion

The RBI FCNR(B) swap window has made foreign currency deposits more relevant for NRIs who can consider a 3-year to 5-year commitment. The product still needs to be read calmly. The rate is one line of the decision; the currency, lock-in, premature withdrawal rule, tax position and repatriation requirement sit beside it.

If you are reviewing Kotak FCNR(B) deposits, check the latest interest rate, available currency, applicable charges and booking requirements before confirming the deposit. A foreign currency deposit works best when the tenure and the currency are aligned with the way you actually plan to use the money.