If you are an NRI with dollar savings sitting in a bank account, 2026 is turning out to be a good year to pay attention to. The Reserve Bank of India has made a few changes that let banks offer much higher interest on foreign currency deposits, and it is worth understanding what happened and why.

What actually changed?

The rupee has weakened this year, and India’s foreign exchange reserves have dropped as well. At the same time, NRIs sending dollars into Indian deposits slowed down a lot compared to last year. To fix this, the RBI stepped in with two moves.

First, on June 8, 2026, the RBI opened a special window that allows NRIs to earn between 5.5% and 7% per annum on dollar deposits, and the interest is tax-free in India. Normally, banks incur a cost to manage currency risk when they accept dollar deposits, typically 2 to 3% per year. The RBI is now covering that cost itself. Since banks no longer have to pay it, they can offer higher rates to depositors instead.

Second, on June 17, 2026, the RBI removed the cap that limited how high FCNR interest rates could go for three- to five-year deposits. Before this, banks could only offer rates up to a certain ceiling. With that ceiling gone, banks have more room to compete for deposits by offering better rates.

What are banks offering right now?

Rates have increased across the banking sector following the RBI’s decision to absorb currency hedging costs. As a result, several banks have revised their FCNR(B) deposit interest rates, with some offering up to 5.6% per annum on US dollar deposits for select tenures. Since interest rates, eligible currencies, and deposit terms vary between institutions, it is advisable to compare available options before opening an FCNR(B) deposit.

Why does this matter?

The RBI tried something similar back in 2013 during a rupee crisis, and it worked well, bringing in around 26 billion dollars in NRI deposits within months. This year’s version is a bit different because US interest rates are also higher than they were back then, so the gap between Indian and US rates is smaller. Even so, analysts think this window could still bring in tens of billions of dollars in fresh deposits.

What to know before you open an account

If you are thinking about opening an FCNR account or an NRI account to take advantage of this, keep a few things in mind:

  • The deposit needs to be opened between June 8 and September 30, 2026.
  • It must be for a tenure of three to five years.
  • There is a one-year lock-in period, after which some banks may allow early withdrawal, depending on their own rules.
  • Once locked in, the rate holds for the full term of the deposit, even after the window closes on September 30.

This window will not stay open forever. Both changes from the RBI are set to end on September 30, 2026, unless extended, so if you are considering this, it is worth acting before the deadline rather than waiting to see if rates move further.

Should you do it?

If you have dollars sitting around earning very little and you do not need that money for a few years, this could be a good time to look into an FCNR account or an NRI account. Compare rates across banks and check the terms carefully before committing your funds.

Note: This article is for general informational purposes and should not be treated as investment advice. Readers are encouraged to consult a qualified financial advisor before making deposit decisions.