On June 17, 2026, India’s central bank (RBI) removed a rule that limited how much interest banks could pay NRIs on certain deposits. Banks reacted fast. Some are now offering NRE deposit rates above 8%. Some FCNR deposit rates have jumped past 7% in US dollars. That is much higher than just a few months ago.

This higher-rate window will not last forever. It closes on September 30, 2026. After that date, the old rate limits come back. If you are an NRI with money sitting in a low-interest account, this is worth a look. This article explains what changed, what rates look like right now, and how to pick between NRE and FCNR deposits — not just which one pays more, but which one is actually right for you.

Key Takeaways

• On June 17, 2026, RBI removed the rate cap on NRE deposits (3 years or more) and FCNR deposits (3 to 5 years). This lasts until September 30, 2026.
• Some banks now pay over 8% on NRE deposits and over 7% on FCNR dollar deposits.
• NRE deposits are held in rupees. FCNR deposits stay in foreign currency the whole time. That difference matters more than the interest rate.
• Moving money from an NRO account into an NRE account does not qualify for the higher rate. Only brand-new deposits count.
• After September 30, 2026, rates are expected to drop back to the old limits.

This is general information, not personal advice. Rates change often and vary by bank — always check the current rate with the bank before you deposit.

What RBI Actually Changed

Before this change, RBI capped how much interest banks could pay on longer-term NRE and FCNR deposits. On June 17, 2026, RBI lifted that cap — but only for two specific types of deposits: NRE deposits held for 3 years or more, and FCNR deposits held for 3 to 5 years. Shorter deposits still follow the old rules.

Why did RBI do this? To attract more money into India from NRIs. One thing worth knowing: if you move money from an NRO account into an NRE account, it does not get the higher rate. Only a genuinely new deposit qualifies, including deposits you renew when they mature.

Where Rates Stand Right Now

Rates have moved fast since June. Some banks — mostly smaller, newer banks — are now offering NRE rates above 8%, with a few going as high as 8.5% on five-year deposits. Before this change, NRE rates were usually between 6.5% and 7.25%.

FCNR dollar deposits have jumped too. Some banks now offer more than 7% on three-to-five-year dollar deposits. Before June, most FCNR rates stayed closer to 4.5–5%.

A word of caution: these are the highest rates being offered, not the rate every bank gives. Big, well-known banks have generally moved slower than small finance banks. Rates also depend on how much you deposit and for how long. Always confirm the current rate with the bank directly before you commit any money.

NRE vs FCNR: The Real Difference

NRE and FCNR deposits have two things in common: the interest you earn is tax-free in India, and you can send the full amount back to your country whenever you want. So what actually separates them?

It comes down to currency. An NRE deposit converts your foreign money into rupees the day you deposit it. It earns interest in rupees. Then, when you withdraw it, it converts back into your foreign currency. If the rupee has grown weaker during that time, you get back less foreign currency than you expected — even though the rupee interest rate looked attractive on paper.

An FCNR deposit avoids this problem entirely. Your money stays in the same foreign currency for the whole term. Whether the rupee gets weaker or stronger, it does not change what you get back. The trade-off is that FCNR rates are usually lower than NRE rates, because the bank — not you — is the one taking on the currency risk.

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Which Should You Choose

Ask yourself one simple question: where will I actually spend this money?