The Reserve Bank of India (RBI) has confirmed that the special relaxations introduced under the Foreign Currency Non-Resident Bank (FCNR-B) deposit scheme will not be extended beyond the scheduled deadline of September 30, 2025. Investors hoping for an extension in the latest monetary policy review were left disappointed as the central bank chose to stay silent on the matter. Consequently, the window for Non-Resident Indians (NRIs) to lock in higher interest rates on foreign currency deposits will close on 30 Sep 2025, after which rates will revert to the standard 3.5% to 4% range.
Dismissing speculation about a premature end to the scheme, RBI Governor Sanjay Malhotra stated that there are no plans to withdraw the incentives before the deadline. He noted that the programme has received an overwhelming response from the NRI community, significantly aiding in building India’s foreign exchange reserves and stabilising the domestic currency.
Private lenders lead the inflow race
Data reveals that private and foreign banks have been the primary beneficiaries of this scheme, outperforming public sector banks in attracting NRI deposits. London-headquartered HSBC secured the top spot, gathering $6.14 billion between 5 Jun 2025 and 31 Jul 2025. Standard Chartered Bank, another major foreign player, accumulated $1.85 billion during this period. Among domestic institutions, the State Bank of India (SBI) ranked second overall with $4.12 billion in inflows, followed closely by ICICI Bank with $3.70 billion. In total, private sector and foreign banks gathered $10.73 billion, while public sector lenders collected $8.84 billion. The RBI’s figures show that the banking sector amassed a total of $36.72 billion during the initial 58 days of the scheme’s launch.
Calls for early closure and strategic exit
Despite the scheme’s success, some market experts have urged the central bank to wrap up the incentives early rather than extending them. Samir Arora, founder of Helios Asset Management, argued on social media that the RBI should consider withdrawing the scheme once inflows touch $60 billion, rather than waiting for them to reach the projected $80 billion to $90 billion mark. He suggested that a premature closure would send a strong message of confidence to the global market, demonstrating India’s ability to swiftly mobilise dollar funding during periods of volatility. Arora also proposed that the government establish a dedicated fund to manage repayments when these high-yield deposits eventually mature.
What is the FCNR-B scheme?
The FCNR-B scheme allows NRIs to deposit funds in Indian banks in key foreign currencies such as US dollars, British pounds, or euros. Unlike other accounts where foreign funds are converted into rupees, FCNR-B accounts hold the deposits in the original foreign currency, eliminating any foreign exchange risk for the investor. Both the principal amount and the interest earned are tax-free in India and can be fully repatriated back to the investor’s country of residence. Financial advisors have highlighted this as a prime opportunity for overseas Indians to secure risk-free, high-yield returns.
