RBI relaxes NRI deposit rate caps — Indian expats in UAE — until September 2026

India's latest move arrives at a crucial time for NRIs in the UAE. Indian expats are being offered some of the most attractive returns in years on foreign-currency deposits after the Reserve Bank of India (RBI) temporarily relaxed key rules governing NRI savings products.

The move has prompted banks across India to sharply raise rates on Foreign Currency Non-Resident (Bank), or FCNR(B), deposits, with some lenders now offering as much as 7.1 per cent on US dollar deposits.

The changes are part of a broader effort by Indian authorities to attract overseas funds, strengthen foreign exchange reserves and support the rupee amid elevated oil prices and global market volatility. The measures are particularly significant for Indians across the Gulf, who account for a large share of India's annual remittance inflows.

According to the RBI, the relaxation will remain in place until September 30, 2026, creating a limited window for non-resident Indians to access the enhanced rates.

What has RBI changed?

The central bank has withdrawn interest-rate ceilings on fresh FCNR(B) deposits with maturities of more than three years and up to five years. Restrictions on interest rates offered on fresh Non-Resident External (NRE) deposits with tenors of three years and above have also been removed.

Before the change, banks were required to keep NRE deposit rates within limits linked to comparable domestic fixed deposits, while FCNR(B) deposits were subject to regulatory caps linked to global benchmark rates.

FCNR(B) vs NRE deposits?

FCNR(B) and NRE accounts are two of the most popular banking options available to non-resident Indians. An FCNR(B) deposit allows NRIs to keep their savings in a foreign currency such as US dollars, pounds sterling or euros, meaning both the principal and interest are protected from fluctuations in the rupee.

An NRE deposit, by contrast, is maintained in Indian rupees and is typically used by NRIs to park overseas earnings in India.