India is leveraging FCNR deposits to bolster the rupee, with recent policies triggering inflows, though experts warn they are not a standalone solution amid global investment uncertainty.
Foreign Currency Non-Resident deposits, better known as FCNR deposits, have moved back into focus as India looks for ways to cushion pressure on the rupee. In the latest episode of the “On the beat” podcast from Businessline, A. Balasubramanian of Aditya Birla Sun Life AMC and Harish Krishnan discuss whether these deposits can support the currency, and how they differ from older measures such as oil bonds.
FCNR deposits let non-resident Indians place money in foreign currency rather than rupees, which helps protect them from exchange-rate swings. Outlook Money notes that the principal and interest stay denominated in the chosen currency until maturity, while interest income is tax-free for NRIs and resident but not ordinarily resident individuals. The deposits are also fully repatriable, which has made them attractive when the rupee is under strain.
The Reserve Bank of India has been using policy tools to revive inflows. Business Standard reported that the central bank opened a swap window for FCNR(B) deposits, allowing banks to raise fresh three- to five-year money at lower hedging costs. The facility also comes with relief from cash reserve ratio and statutory liquidity ratio requirements, giving banks more room to compete for deposits. Financial Express said those measures helped trigger about $17 billion in FCNR(B) inflows over roughly 40 days from June 8 to July 17, 2026.
Even so, the response has not been uniformly fast. Mint reported that bankers told the RBI the pace of inflows was slower than hoped, but not unusual for this kind of deposit mobilisation, with roughly $7 billion raised through the scheme at one point. The broader argument from fund managers is that FCNR inflows can ease pressure on the rupee, but they are not a cure-all. The stronger case, they say, still rests on India’s growth outlook, the behaviour of foreign investors and whether global money continues to see Indian assets as a long-term opportunity despite recent outflows.
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