FCNR (B) deposits interest rates increased from today

In the Statement on Developmental and Regulatory Policies issued today as part of the Bi-monthly Monetary Policy Statement for 2024-25 dated December 06, 2024, the interest rates on FCNR deposits increased from December 6, 2024. Interest rates on FCNR deposits are based on the Overnight Alternative Reference Rate for the respective currency/ Swap.

With effect from December 6, 2024, to March 31, 2025, the interest rate ceiling on FCNR (B) deposits shall be as under:

 Under the London Interbank Offered Rate (LIBOR) as a benchmark rate came to an end by the end of 2021, RBI permitted banks to offer interest rates on FCNR (B) deposits using the widely accepted ‘Overnight Alternative Reference Rate (ARR).

In terms of clause (g) of the above paragraphs 18 and 19 of the MDs dated March 03, 2016, interest rates on FCNR (B) deposits were subject to ceilings of Overnight Alternative Reference Rate (ARR) for the respective currency/swap, plus 250 basis points for deposits of 1 year to less than 3 years maturity and overnight ARR plus 350 basis points for deposits of 3 years and above and up to 5 years maturity. By allowing higher interest rates, the RBI aims to attract more foreign currency inflows, which can strengthen India’s foreign exchange reserves.