Economic Survey 2025: Raising FCNR deposit interest rate ceiling to help increase credit growth, attract foreign flows

Deposit

The Reserve Bank of India’s move to raise the interest rates ceiling by on Foreign Currency Non-Resident (FCNR) deposits is expected to help credit growth and attract foreign flows to India, the Economic Survey 2024-25, which was released on January 31, said.

“These measures will not only help banks attract investible funds for credit growth but will also help attract more foreign inflows into India,” it said.

The RBI in December increased the interest rate ceiling on FCNR-B deposits with maturities of 1 to 3 years and 3 to 5 years.Follow our live blog for the latest on Economic Survey  

Accordingly, banks can now garner fresh deposits under these categories by offering a higher rate of interest, the survey, which comes a day ahead of the Budget, said.

A FCNR-B is a term deposit account that non-resident Indians (NRIs) can open with banks in a foreign currency. Since the account is maintained in a foreign currency, the depositor is not exposed to exchange rate risk, making it attractive for NRIs.

The central bank has permitted banks to raise fresh FCNR(B) deposits of 1 year to less than 3 years maturity at rates not exceeding Overnight Alternative Reference Rate (ARR) plus 400 bps and deposits with maturity between 3 to 5 years at rates not exceeding ARR plus 500 bps.

This relaxation was be in place till March 31.