To maximise returns from an FCNR deposit, compare interest rates across currencies and tenures, pick a bank with competitive slabs for the investment amount, and match the deposit period to how long the funds can remain invested without needing to be withdrawn before maturity. Interest rates on foreign currency non-resident deposits vary by bank, currency and tenure. The choice made at booking decides the final return, since rates stay fixed for the entire tenure once locked in.
Why currency and tenure choice matters
An FCNR deposit lets non-resident Indians hold overseas earnings in foreign currency instead of converting them to Indian rupees. A few factors decide how much the deposit actually earns:
- The rate is fixed at booking, so the tenure chosen and the currency held both directly shape the final maturity value
- USD, GBP, EUR, CAD, AUD, JPY and SGD are commonly available across banks, though not every bank offers every currency for every tenure
- Rates usually rise with longer tenures on some currencies, while other currencies pay more for shorter commitments, so check the full tenure ladder rather than checking just a single headline figure
- Funds can come from an inward remittance from abroad, a transfer from an existing NRE account, or the renewal proceeds of a maturing foreign currency non-resident deposit, giving NRIs more than one route to fund the account
How compounding builds up returns
For FCNR deposits the minimum tenure is 1 year..The interest is compounded every 180 days, with the accrued interest added to the principal for subsequent interest calculations, as per the bank’s applicable terms. Banks use a 360-day year for calculation purposes rather than the standard calendar year, a convention common across foreign currency deposits internationally.
Over a five-year tenure, this compounding effect means the difference between two similar FCNR deposit rates compound meaningfully by maturity, so even a marginally higher rate at booking can translate into a noticeably larger final sum.
For instance, on a USD 10,000 deposit for five years, a rate of 6.75% per annum, compounded every 180 days, grows to approximately $14,004 at maturity. At 6.50%, the same deposit grows to approximately $13,833. That 0.25% gap alone adds close to USD $171 by maturity, purely from the rate booked on day one.
Comparing rates before you book an FCNR deposit
FCNR deposit rates differ not only across banks but also across deposit amount slabs, with some banks offering different rates above specified thresholds (for example, USD 1 million). Before booking, check:
- The rate offered for the specific currency and tenure, not just the highest advertised figure.
- Whether the deposit slab, below or above 1 million, changes the applicable rate.
- The minimum lock-in period, since no interest is paid on premature withdrawal within the first year.
- Whether interest is paid at maturity, half-yearly, or compounded and credited on renewal.
- Whether any premature withdrawal penalty applies once the lock-in period is completed, since this varies by bank even though the interest itself is not forfeited after the first year.
IDFC FIRST Bank offers FCNR deposits across USD, GBP, EUR, AUD and SGD with tenures from 1 to 5 years, along with tax-free interest and full repatriability of both principal and interest.
FCNR Plus: A Limited-Period Opportunity for USD FCNR Deposits
For customers looking to lock in attractive US Dollar returns, IDFC FIRST Bank offers FCNR Plus, a special USD FCNR Deposit available under the RBI’s limited-period FCNR Swap Scheme. The deposit offers an interest rate of 6.75% p.a. on tenures ranging from 3 to 5 years*, with a minimum lock-in period of 1 year.
In addition to attractive returns, customers benefit from key FCNR advantages, including tax-free interest in India, protection from INR currency fluctuations, and full repatriability of both principal and interest.
Further enhancing customer convenience, IDFC FIRST Bank is among the few banks in India to offer a fully digital FCNR deposit booking journey, enabling eligible customers to seamlessly create an FCNR deposit online through debit to their NRE Savings Account, without the need for branch visits or physical documentation.
Bookings under the FCNR Plus offering are available only until 30 September 2026
*The rate is as on 16 June 2026 and may be revised from time to time at the Bank’s sole discretion.
Steps to choose the right deposit for your goals
- List the currencies currently held or expected to be received, since converting purely to chase a rate can add exchange costs.
- Compare rates across a few banks for that currency and the intended tenure.
- Match the tenure to the actual investment horizon, since premature withdrawal of an FCNR deposit before one year generally does not earn interest
- Confirm compounding frequency and the day-count convention used, as these affect the final maturity value.
- Check repatriation terms and any nomination facility before booking.
Conclusion
The best returns come from matching currency, tenure and bank to individual goals rather than chasing a single headline rate. A figure that looks attractive on paper can lose its edge once compounding, deposit slabs and lock-in terms are factored in.
Comparing these details before booking, with options like IDFC FIRST Bank’s offering tax-free interest and full repatriability, helps NRIs grow their overseas savings steadily while staying protected from currency volatility.
