FCNR deposits being foreign-currency denominated, do not carry currency risk

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Andrey_KZ

RBI’s foreign-currency deposit mobilisation special measures and a stronger dollar made NRIs increasingly opt for foreign-currency non-resident deposits (FCNR-B) in the first quarter ended June. But a decline in rupee-denominated NRE (non-resident external) balances pulled down overall NRI-deposits inflow during the period.At $2.8 billion, the total NRI-deposit inflow in Q1 FY27 was 22 per cent lower y-o-y but FCNR(B) deposit inflows surged 123 per cent y-o-y to $1.7 billion, showed RBI data released on Tuesday. Rupee-denominated NRE account balances plunged 93 per cent during the period to $0.14 billion. The inflows into NRO accounts, meanwhile, were at $0.9 billion.Similarly, the stock of overall outstanding NRI deposits remained flat.FCNR(B) in favourOutstanding total NRI deposits stood at $169 billion in June, almost unchanged from $168 billion a year ago, but up from $166 billion in May this year. Outstanding FCNR(B) deposits rose 5.7 per cent y-o-y to $35.5 billion. Outstanding stock of NRE deposits fell 3.8 per cent to $98.8 billion.RBI introduced special measures in June for FCNR(B) deposits to encourage foreign-currency inflows into India. Under the framework, the central bank provided lenders with a special forex-swap facility for eligible fresh FCNR(B) deposits, helping the latter offer more competitive deposit rates. As on August 21, a total of $72.85 billion of foreign exchange has been generated via FCNR(B) deposits, External Commercial Borrowings (ECBs), and Overseas Foreign Currency Borrowings (OFCBs) under this facility.No currency riskFCNR deposits being foreign-currency denominated, do not carry currency risk, and the surge suggests that NRIs are increasingly choosing to deposit savings in this instrument rather than rupee-denominated deposits.The RBI’s special forex-swap window also allows NRIs to move funds from NRE accounts to FCNR(B), said experts, adding that it is likely that it could have also been the case in June.NRE deposits are bank accounts held in India by NRIs to deposit and manage money earned in foreign countries. Non-Resident Ordinary deposits are also rupee-denominated bank accounts or fixed deposits held by NRIs.Published on August 25, 2026