Neutral impactCorporate Action
Banks lure NRIs with high-return FCNR(B) deposits, warn of leverage risks
Economic Times 7 hrs ago·21 Jul 2026, 6:56 pm
Indian banks are actively soliciting Non-Resident Indian (NRI) deposits through the Foreign Currency Non-Resident (Bank) (FCNR(B)) scheme. These fixed deposits offer attractive returns, with banks projecting rates between 13% and 16% on dollar-denominated investments. To enhance these yields, banks are offering leverage, allowing customers to borrow against their deposits to amplify their returns.
While the high returns are appealing, this strategy carries significant risks. Investors must be aware that early redemption often triggers heavy penalties, and lenders retain control over the pledged funds. This structure creates a liquidity constraint, meaning investors cannot easily access their capital if needed, despite the high interest rates.
Key takeaways
- Category: Corporate Action.
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