Foreign Bank FD rates in India: How do they stack up against public and private banks?

FD rates in May 2026: With market swings returning and uncertainty around global growth increasing, many investors are shifting focus from chasing returns to preserving capital. In such phases, fixed deposits (FDs) often re-emerge as a defensive choice, offering predictable earnings and insulation from daily market fluctuations.

While FDs may not deliver the high-growth potential associated with equities or market-linked products, they continue to play an important role in portfolio stability. For conservative investors, retirees and savers seeking low-risk avenues, they remain a reliable option. With the Reserve Bank of India (RBI) expected to hold rates steady for now, deposit rates are also likely to stay relatively unchanged in the near term.

Although public and private sector banks dominate India’s deposit landscape, foreign banks have steadily built a presence in select segments, particularly among NRIs, global professionals and investors looking for currency diversification and specialised deposit products.

Foreign banks FD rates

Foreign bank fixed deposits in India are especially popular through Foreign Currency Non-Resident (FCNR) accounts. These deposits allow NRIs to maintain balances in currencies such as the US dollar, pound sterling and euro while earning tax-free interest in India.

As of May 2026, FCNR rates for US dollar deposits generally range from 2.75% to 5.35% annually depending on the tenure and bank. One-to-two-year USD deposits typically offer between 3.25% and 5.30%, while rates for two-to-three-year tenures range from around 2.75% to 4.65%.

For pound-denominated deposits, banks are offering approximately 4.8–5%, while euro deposits currently yield around 2.75–3%.

Apart from FCNR accounts, foreign banks also provide INR-denominated NRE and NRO fixed deposits with competitive returns.

Deutsche Bank currently stands out among foreign lenders with rates touching 7%, putting it closer to leading private banks than public sector institutions.

Public sector banks

Public sector banks continue to remain a preferred option for many depositors due to government ownership and perceived safety. However, their FD rates remain relatively moderate.

Among major public sector banks:

• Punjab & Sind Bank: 6.75%
• Bank of Maharashtra: 6.65%
• Bank of India: 6.60%
• Punjab National Bank: 6.60%
• State Bank of India: 6.45%
• Bank of Baroda: 6.45%

Most public sector banks currently offer rates between 6% and 6.3% for popular one-year to five-year tenures.

Private banks

Private sector lenders remain more aggressive in competing for deposits and generally offer higher rates.

Among notable banks:

• CSB Bank: 7.35%
• IDFC FIRST Bank: 7.25%
• Tamilnad Mercantile Bank: 7.25%
• Yes Bank: 7.00%
• HDFC Bank: 6.50%
• ICICI Bank: 6.50%

Several private banks also provide additional returns of 0.25–0.75 percentage points for senior citizens.

What should investors consider?

Financial advisers caution investors against choosing deposits solely based on the highest rates. Factors such as bank credibility, liquidity needs, tax implications and deposit insurance should also influence decisions.

Foreign bank FDs may appeal to NRIs seeking currency flexibility and tax efficiency. Public banks continue to attract conservative savers prioritising security, while private banks may suit those willing to explore higher-yield options.

As uncertainty continues across financial markets, FDs are regaining relevance — not as return-maximising products, but as a stability anchor within a diversified portfolio.