Private sector banks (PVBs) and foreign banks have taken the lead in the latest drive for Foreign Currency Non-Resident Bank (FCNR(B)) deposits. These are accounts where NRIs can keep money in foreign currencies like US Dollars and earn tax-free interest in India. According to data shared in the Lok Sabha, private lenders were much more successful than most public sector banks (PSBs) in attracting these funds between June and July 2026 under a special Reserve Bank of India (RBI) window.

The RBI introduced a special swap facility (a deal to exchange currencies and reverse it later) to help bring more foreign money into India. The goal of this scheme is to strengthen the Indian Rupee and increase the country's foreign exchange reserves. Banks were encouraged to collect deposits with a maturity of 3 to 5 years. This helps the national economy by keeping the balance of payments stable.

In the race for deposits, HSBC emerged as the overall winner, collecting a massive $6.14 billion. Among Indian banks, State Bank of India (SBI) took the top spot with $4.12 billion. ICICI Bank followed closely with $3.69 billion. Other major performers included Kotak Mahindra Bank, Axis Bank, HDFC Bank, and Bank of Baroda, all of which crossed the $1 billion mark. Interestingly, just 12 foreign banks managed to collect nearly as much money as all 12 Indian public sector banks combined.

Private banks together raised $10.73 billion, while PSBs raised $8.84 billion. Experts believe private and foreign banks did better because they offer higher leverage (borrowing funds to increase investment returns) and better overall returns to NRI customers. To stay competitive, big private players like HDFC Bank and ICICI Bank even hiked their interest rates by 25 basis points (0.25%) to reach a rate of 6.25%.

For Indian bank officers, this trend shows a shifting landscape in the NRI banking segment. While SBI remains the leader among government banks, other PSBs like PNB, Canara Bank, and Indian Bank are trailing behind the aggressive marketing and pricing of private rivals. The high collection by foreign banks like HSBC and Standard Chartered also highlights the strong global reach these institutions have with the Indian diaspora.

Looking ahead, the RBI will swap these foreign currency amounts with the banks, which will increase liquidity (the amount of cash available) in the Indian banking system. However, this is a temporary boost. When these deposits mature in 3 to 5 years, the transaction will be reversed. For now, the successful mop-up of funds provides a safety cushion for the Indian Rupee against global market volatility.