(INDIA) – RBI opened a temporary special window for banks to offer higher interest rates on fresh FCNR(B) deposits from non-resident Indians, with the facility running until September 30, 2026.

The measure applies to fresh U.S. dollar FCNR(B) deposits placed for 3 to 5 years. RBI is absorbing the hedging cost, a step that lets banks offer more attractive rates to NRI depositors.

One report cited in the announcement said NRIs can earn 5.5% to 7% on these dollar deposits under the window. The deposits are also described as tax-free in India and carry a 1-year lock-in period.

That structure puts the RBI move squarely on funding terms. Banks get room to pay more on eligible foreign currency deposits because the central bank is taking on the hedging cost that would otherwise weigh on pricing.

The window is also narrow by design. It does not apply to every NRI deposit product, but to fresh U.S. dollar FCNR(B) deposits that meet the stated tenor of three to five years.

Time is a central part of the offer. Banks can use the special window only until September 30, 2026, while depositors who enter under it must accept the 1-year lock-in period.

FCNR(B) deposits sit in foreign currency, and in this case the eligible deposits are in U.S. dollars. The terms highlighted for this window focus on those dollar deposits, their tax-free status in India, and the ability of banks to raise rates because RBI is absorbing the hedging cost.

Normal NRE and NRO deposits remain outside the special window described here. The RBI measure centers on FCNR(B) deposits, which means the comparison turns on the product itself rather than a broad change across all NRI accounts.

For depositors, the reported rate range of 5.5% to 7% is likely to draw the most attention. Yet the fine print matters: the deposit must be fresh, must be in U.S. dollars, and must be booked for a term of at least three years and up to five.

The one-year lock-in also changes the practical calculation. A depositor considering the window would need to match the higher offered return against the inability to exit freely during that initial period.

Banks now have an incentive to market these deposits more actively before the deadline. RBI’s decision to absorb the hedging cost reduces a constraint that would normally limit how far lenders can raise rates on foreign currency deposits without eroding their own economics.

That matters most on pricing. Hedging cost can eat into the return a bank can pass on, so RBI’s intervention makes a higher quoted rate easier to offer while keeping the deposit inside the central bank’s stated framework.

The temporary nature of the window also means the timing of deposit placement matters. A fresh FCNR(B) deposit booked before September 30, 2026 can come under the special terms, but the announcement does not describe this as a permanent change in the rate regime.

NRIs weighing the option would first need to identify banks that are actually offering the window rates. They would then need to confirm that the account is a fresh U.S. dollar FCNR(B) deposit, choose a tenor within the 3 to 5 years band, and check how the 1-year lock-in affects access to funds.

Tax treatment also forms part of the appeal presented in the announcement. The deposits are described as tax-free in India, a feature that can make the quoted return more meaningful when compared with other products that do not carry the same treatment.

Repatriability remains part of the way depositors usually assess NRI accounts, but the RBI window outlined here stays focused on one product and its immediate economics. The stated benefits are the higher rate potential, dollar denomination, tax-free treatment in India, and central bank absorption of the hedging cost.

That leaves banks with a defined sales period and depositors with a defined decision window. Anyone entering under the facility does so on terms that are temporary for the market but binding for the individual deposit once opened.

The move arrives as RBI uses a targeted instrument rather than a broad-based change to all deposit categories. By lifting the cap through a special window for fresh FCNR(B) deposits and taking on the hedging cost, the central bank has created a short-term channel for banks to attract NRI dollar money on richer terms.

What stands out in the final structure is its precision: fresh U.S. dollar FCNR(B) deposits, a tenor of 3 to 5 years, reported returns of 5.5% to 7%, tax-free status in India, a 1-year lock-in, and a closing date of September 30, 2026.