Strong demand from UAE-based Indians drives foreign-currency deposits through GIFT City, while inflows from the US and UK remain subdued
The United Arab Emirates has emerged as the leading source of Foreign Currency Non-Resident (Bank), or FCNR(B), deposits being mobilised by Indian banks, as lenders increasingly target non-resident Indians (NRIs) in the Gulf.
Bankers said UAE-based customers account for close to half of the FCNR(B) deposits being raised under the Reserve Bank of India’s special window. Much of the mobilisation is being routed through banks’ branches in Gujarat International Finance Tec-City (GIFT City), according to industry sources.
The strong response from the UAE contrasts with relatively weak participation from NRIs in the United States and the United Kingdom. Banks say most of their new customers under the programme are coming from the UAE, with deposits being funded through their GIFT City operations.
The appeal for Gulf-based Indians is partly linked to the tax and currency structure of the deposits. FCNR(B) accounts allow NRIs to hold deposits in foreign currencies, helping them avoid direct exposure to fluctuations in the rupee. Interest on qualifying FCNR deposits is exempt from Indian income tax, while the UAE does not impose personal income tax on individuals.
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The latest surge follows the RBI’s 2026 special FCNR(B) window, under which banks can mobilise eligible foreign-currency deposits with maturities of three to five years
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The scheme applies to deposits booked or renewed between June 8 and September 30, 2026
Indian banks have responded by offering more competitive returns. Some lenders are currently offering FCNR(B) rates of more than 6 per cent, with rates reaching as high as 7.5 per cent in certain cases.
The trend has also strengthened GIFT City’s role as a channel for Indian banks seeking overseas deposits. Recent industry data indicates that banks are raising FCNR funds faster than initially expected, with some public-sector lenders reporting sizeable inflows.
