The Foreign Currency Non-Resident (Bank) or FCNR(B) is a specialized fixed-term deposit account scheme in India designed for Non-Resident Indians (NRIs), Overseas Citizens of India (OCIs), and Persons of Indian Origin (PIOs). Unlike Non-Resident External (NRE) or Non-Resident Ordinary (NRO) accounts, the FCNR(B) deposit allows the account holder to maintain their funds entirely in a designated foreign currency, such as the US Dollar (USD), Pound Sterling (GBP), or Euro (EUR), for the full term. This mechanism was created to solve the problem of currency risk for NRIs, as both the principal and interest are protected from fluctuations in the Indian Rupee (INR).
The scheme is governed by the Foreign Exchange Management Act (FEMA) and regulations set by the Reserve Bank of India (RBI). Key provisions include a flexible tenure ranging from a minimum of one year to a maximum of five years. The interest earned on FCNR(B) deposits is 100% tax-exempt in India under Section 10(15)(iv)(fa) of the Income Tax Act. Furthermore, the principal and interest are fully repatriable, meaning they can be freely transferred back overseas.
The FCNR(B) scheme is connected to the broader framework of NRI banking, particularly the NRE and NRO accounts, but is distinct because it is a term deposit held in foreign currency.
The scheme has seen recent changes, notably with the RBI introducing a temporary US Dollar-Rupee forex swap facility via Circular RBI/2026-27/99 on June 8, 2026. This special window, which was available for fresh deposits with a tenure of three to five years until August 31, 2026, allowed the RBI to absorb the currency-hedging costs for banks. By eliminating this cost, banks were able to offer significantly higher interest rates, with some rates rising to nearly 7%, to attract stable, long-term foreign capital and strengthen India's foreign exchange reserves. The underlying structure of the FCNR(B) as a foreign currency term deposit and its tax-exempt status in India remained the same.