13%-14% annualised return: Indian Bank raises FCNR deposit rate to 6%, eyes $2 billion

Indian Bank has revised the interest rate on its FCNR(B) deposits to 6% from 5.5%, offering depositors an annualised return of around 13%-14% as the public sector lender pushes to raise $2 billion through the foreign currency non-resident deposit scheme.

The rate revision follows the Reserve Bank of India’s withdrawal of the interest rate ceiling on fresh FCNR(B) deposits with maturities of three to five years, a relaxation in effect until September 30, 2026. Indian Bank MD and CEO Binod Kumar said in Chennai on Friday that the bank has seen a spurt in FCNR(B) deposits over the past 25 days as a result.

‘So far, we have secured $140 million between June 15 and July 9. We plan to raise around $2 billion by September this year. We already have a pipeline of $1 billion,’ Kumar said.

The $2 billion target is more than four times the bank’s FCNR(B) deposit mobilisation in FY26, when it raised $457 million, and Kumar said the proposed sum would be among the highest the bank has achieved under the scheme.

The deposit push comes alongside strong quarterly earnings, with Indian Bank posting a 10% rise in net profit to Rs 3,273 crore in the first quarter, up from Rs 2,973 crore a year earlier, driven by an increase in yield on advances and strong growth in net interest income.