Bank of Baroda has raised interest rates on foreign currency non-resident dollar-denominated bank deposits for the second time in a week, launching the 'bob Legend FCNR(B) Deposit Scheme' on Tuesday. The state-owned bank had previously launched a Special FCNR(B) Deposit scheme on Thursday, under which interest rates for three- to five-year tenure were raised to 5.50% to 6.00%. Under the latest scheme, Bank of Baroda has further increased rates by 25-50 basis points to 6.00-6.25% for dollar-denominated FCNR(B) deposits for three- to five-year tenures. The bank emphasized that NRIs can benefit from the dual advantages of wealth creation and liquidity by availing of the hassle-free overdraft/loan facility against FCNR(B) deposits, providing enhanced financial flexibility while enabling them to maximize their returns.
The FCNR(B) Deposit Schemes now offer interest rates up to 6.50% p.a. for deposits between 3 to 5 years, with varying structures across different tenure periods. Bank of Baroda provides 6.00% p.a. (3 years to less than 4 years), 6.10% p.a. (4 years to less than 5 years), and 6.25% p.a. (5 years). Canara Bank continues to offer up to 6.50% p.a., while Federal Bank and Indian Overseas Bank (IOB) both provide 6.25% p.a. (3 years to 5 years). The schemes come with a one-year lock-in period and are effective from June 2026.
The schemes offer significant tax advantages for eligible depositors. As reported by ETWealth, interest income earned on FCNR deposits is completely exempt from income tax in India as long as the depositor holds NRI or RNOR (Resident and Not Ordinarily Resident) status. Additionally, following the Reserve Bank of India's recent measures, the government will bear the hedging cost on 3 to 5-year FCNR(B) deposits till September 30, 2026. These measures are specifically designed to attract foreign currency inflows and provide comprehensive support to NRIs, OCIs, and Persons of Indian Origin seeking to maintain their financial connections with India.
Bank of Baroda's shares closed at ₹275.35 on the National Stock Exchange on Tuesday, down 0.3% from the previous close. For the March quarter, the bank reported a net profit of ₹56.16 billion on total income of ₹366.09 billion. The rate revisions come after the Reserve Bank of India announced a US dollar-rupee swap facility for fresh FCNR(B) deposits, mobilized for three to five years. The central bank has allowed banks to price these deposits according to their internal policies, but within the overall regulatory ceiling. Several banks have revised FCNR(B) deposit rates following this regulatory announcement.
