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Markets & Capital Desk
The 7.5% Dollar Trap: What NRIs Must Verify Before Locking Into RBI's FCNR(B) Window
RBI's temporary swap facility (through Sept 30, 2026) has pushed USD FCNR(B) rates as high as 7.5% p.a. on 3-5yr deposits. Before locking in: 12 questions on rate reality, fees, early exit, tax, and DICGC insurance limits — plus a 5-point checklist to request from your bank in writing.
The 7.5% Dollar Trap: What NRIs Must Verify Before Locking Into RBI's FCNR(B) Window
Window: June 8 – September 30, 2026
The RBI has opened a temporary swap facility that lets Indian banks absorb their currency-hedging costs and pass the savings on to depositors — pushing USD FCNR(B) fixed deposit rates as high as 7.5% per annum on 3-to-5-year terms. For dollar holders used to near-zero US savings yields, that headline number is hard to ignore.
But 7.5% is a ceiling, not a guarantee — and the fine print matters more than the rate. Here are the 12 questions to work through before you move a single dollar.
12 Questions to Ask Before You Commit
Bottom-Line Action Checklist
Request these 5 figures in writing from your bank before committing funds:
• Net interest rate for your exact deposit size and tenure — not the advertised headline rate.
• Net dollar amount that actually lands in the deposit after fees and conversion costs.
• Effective yield if closed early — at the 1-year and 2-year marks.
• Early-exit penalty percentage and any additional cost deductions.
• Total outward remittance cost to move funds back to the UAE at maturity.
Bottom line: the RBI swap window is a genuine, time-boxed opportunity to lock in dollar yields that haven't been available since 2013 — but the 7.5% headline is bank- and tenure-specific, not universal. The deposit is safe from currency risk; it is not automatically safe from fee drag, liquidity constraints, or insurance gaps above ₹5 lakh. Do the five-point math before you wire anything.