# Indian banks slash FCNR deposit rates by up to 310 basis points — retained record

> Retained news record from news:india-et-markets.

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source: [news](https://highsignal.app/data/news) (news:india-et-markets)  published 2026-09-01 19:13 ingested 2026-09-02 02:58

[original source ↗](https://economictimes.indiatimes.com/markets/stocks/news/indian-banks-slash-fcnr-deposit-rates-by-up-to-310-basis-points/articleshow/133694499.cms)

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State Bank of India (SBI), HDFC Bank and ICICI Bank sharply reduced interest rates on long-tenure foreign currency non-resident deposits, unwinding the unusually high returns offered on dollar commitments since the special window was operationalised June 8.
Also Read: FCNR inflows may delay rate hikes, but banks face margin pressure: Report
HDFC Bank has reduced its five-year US dollar FCNR(B) rate to 3.15% from 6.25%, a cut of 310 basis points, effective September 1. One basis point is a hundredth of a percentage point. ICICI Bank has similarly cut its five-year dollar deposit rate to 2.90% from 6.00%, also a reduction of 310 basis points. The bank had raised rates on three-to-five-year FCNR(B) deposits after the RBI introduced the special facility in June.
SBI's regular 5-year FCNR(B) rate is now 3.05%, compared with 5.75% offered for deposits of up to $1 million under its Advantage FCNR(B) scheme, implying a 270-basis-point reduction. For deposits above $1 million, SBI had offered 6%, translating into a 295-basis-point difference from the current rate.
The sharp reset shows banks rapidly unwinding the premium they were willing to pay for long-duration dollar deposits once the RBI-supported economics of raising such funds disappeared.
Banks had aggressively raised three-to-five-year FCNR(B) rates after the central bank introduced a special dollar-rupee swap facility in June, which lowered the effective cost of mobilising foreign-currency deposits and enabled lenders to offer substantially higher returns to non-resident depositors.
Also Read: Numbers Boost: FCNR-B inflows help banks cut expensive bulk deposits
The facility drew strong inflows.
Indian banks collectively mobilised $65.4 billion through FCNR(B) deposits by August 21, while overall foreign-currency inflows under the RBI's facilities, including overseas borrowings, reached $73 billion. The strong response prompted the RBI to advance the closure of the FCNR(B) window to August 31 from the earlier September 30 deadline.
The sharp fall in three-to-five-year rates, even as shorter-tenure rates remain broadly stable, suggests banks are no longer willing to pay the exceptional premium on long-term dollar deposits without the benefit of the RBI swap facility.
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