NRIs Consider 7.5% Returns on US Dollar Deposits in India

Jul 29, 2026

76 min

Jul 29, 2026 01:31

NRIs depositing US dollars in India: 12 questions to ask before chasing 7.5% returns

## Overview of FCNR Deposits

Non-resident Indians (NRIs) are being offered up to 7.5% returns on US dollar fixed deposits in India. These Foreign Currency Non-Resident Bank (FCNR) deposits are held in foreign currencies and can be a viable option for those willing to lock their funds for several years.

## Key Considerations

The 7.5% return is not guaranteed for all; it varies based on factors like the bank, deposit size, and tenure. The Reserve Bank of India's temporary swap facility has allowed banks to offer higher rates by reducing currency risk costs. This facility is available until September 30, 2026.

## Risks and Costs

While the deposits protect against rupee depreciation, they come with potential costs. Transfer fees, conversion charges, and penalties for early withdrawal can affect overall returns. Additionally, only a portion of the deposit is insured, up to Rs500,000, which is approximately $5,882 at current rates.

## Tax Implications

Interest earned on FCNR deposits is tax-free in India for NRIs, but tax obligations may vary based on the depositor's country of residence. US citizens, for example, may still have tax and reporting requirements.

## Repatriation and Flexibility

Funds from FCNR deposits can be repatriated freely, but procedures vary by bank. Some banks may not allow partial withdrawals, so splitting funds across multiple deposits could offer more flexibility.

## Conclusion

NRIs considering these deposits should evaluate the actual rate they qualify for, the costs involved, and the bank's stability. It's crucial to understand the terms and potential penalties before committing.

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