The Foreign Currency Non-Resident (Bank) deposit, or FCNR(B), is a term deposit scheme for Non-Resident Indians (NRIs), Persons of Indian Origin (PIOs), and Overseas Citizens of India (OCIs). Introduced on May 15, 1993, it replaced the earlier FCNR(A) scheme, which was created in 1975. The FCNR(A) scheme was withdrawn starting August 1994 because the Reserve Bank of India (RBI) bore the exchange rate risk, leading to open-ended liabilities and quasi-fiscal costs for the government, particularly after the 1991 balance of payments crisis.
The FCNR(B) scheme works as a fixed deposit, typically with a tenure between one and five years, and is maintained in a freely convertible foreign currency like the US Dollar (USD), British Pound (GBP), or Euro (EUR). The core mechanism is that both the principal and interest are denominated in the foreign currency, which protects the depositor from the risk of rupee depreciation. Interest earned on these deposits is exempt from Indian income tax under Section 10(15)(iv)(fa) of the Income Tax Act, 1961, and the funds are fully and freely repatriable.
It is regulated by the RBI under the Foreign Exchange Management Act (FEMA) and is often connected to other NRI accounts like the NRE (Non-Resident External) account. A significant recent change occurred on June 8, 2026, when the RBI issued Circular RBI/2026-27/99 to open a temporary US Dollar-Rupee swap facility. This special window, which was open until September 30, 2026, involved the RBI absorbing the currency-hedging costs for banks and exempting the fresh deposits from Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) requirements. This move was a targeted step to augment India's foreign exchange reserves and allowed banks to offer significantly higher interest rates.