In a bid to attract investments from the Indian diaspora, banks are expected to increase interest rates on foreign currency non-resident-bank (FCNR-B) deposits by up to 200 basis points. This decision follows the Reserve Bank of India's (RBI) announcement that it would cover the full hedging costs associated with these deposits. Currently, dollar-denominated FCNR-B deposits yield between 2.90% and 3.55%, significantly lower than the approximately 6% offered on rupee deposits. The RBI's initiative is aimed at boosting foreign currency inflows, particularly as inflows into FCNR-B deposits plummeted by 87% in FY26, falling to $946 million from $7.076 billion in the previous fiscal year. Canara Bank's managing director, Brajesh Kumar Singh, indicated that they would initially raise rates by 150 basis points, with the possibility of increasing them further. Other banks, like CSB Bank, also anticipate that FCNR-B rates could align closely with domestic deposit rates. The RBI's concessional swap facility, valid until September 30, is expected to enable banks to attract more surplus funds from overseas Indians, particularly benefiting south-based banks with a larger share of non-resident customers.