Where the RBI Repo Rate Sits in 2026, and What It Has Done to Your NRE, NRO and FCNR Deposit Rates

In December 2025 the RBI cut the repo rate to 5.25%, the fourth cut of a calendar year that took 125 basis points out of the policy rate, and through the first half of 2026 it has sat there. If you booked an NRE fixed deposit at 7.75% in late 2024 and it is maturing now, the renewal quote your bank is showing you is closer to 6.75%, and you are right to feel the change. A full percentage point off a Rs 50 lakh deposit is Rs 50,000 of annual interest, gone, on the same money in the same bank. The question is not whether rates fell. They did. The question is what to do about tenure and currency right now, in the second quarter of 2026, with the repo rate parked and an unusual FCNR window open for a few more months.

The 30-second answer: The RBI repo rate is 5.25% as of the June 2026 policy, after 125 bps of cuts across 2025 (to 6.25% in February, 6.00% in April, 5.50% in June, 5.25% in December) and three holds in 2026. Rupee NRE and NRO deposit rates have followed it down: the best one-to-three year NRE FDs now sit around 6.50% to 7.25% versus 7.5%-plus in late 2024. The big 2026 development is the FCNR(B) swap window, where the RBI bears the hedging cost on fresh three-to-five year FCNR deposits booked up to September 30, 2026, letting banks pay 5.5% and upwards in USD versus roughly 3% before. With the rate cycle near its floor, ladder the NRE curve and lock the long end now, and seriously consider FCNR before the window closes.

This guide assumes you already know what NRE, NRO and FCNR accounts are and how their tax treatment differs; if not, start with NRE, NRO and FCNR accounts explained. What follows is the part that actually moves money this year: how far the repo rate has fallen and where it likely goes next, the precise way that flowed into your three deposit types, what the FCNR swap window is and why it is a genuinely time-limited opportunity, and a concrete laddering and tenure plan for the rate environment we are actually in.

The repo rate fell 125 basis points in eleven months, and it is now parked

Start with the arc, because the tenure decision falls out of it. The repo rate entered 2025 at 6.50%, where it had sat since February 2023. Then the easing cycle arrived in a hurry. The RBI cut 25 bps to 6.25% in February 2025, another 25 bps to 6.00% in April 2025, a larger 50 bps to 5.50% in June 2025, and a final 25 bps to 5.25% in December 2025. That is 125 basis points in a single calendar year, an aggressive cycle by Indian standards, with the stance shifting to neutral along the way.

Through the first half of 2026, under Governor Sanjay Malhotra, the Monetary Policy Committee has held at 5.25% at the February, April and June meetings. The June 5, 2026 decision to hold was unanimous, with the MPC describing CPI inflation as below target but with an upward bias, citing elevated energy prices, and committing to stay data-dependent. The stance remains neutral, which is the word that should shape your tenure choice.

Here is the honest framing on where it goes from here, and I will be explicit that this is a forecast, not a fact. A neutral stance after 125 bps of cuts means the RBI has used most of its room and is now waiting. From a 5.25% repo rate with inflation described as having an upward bias, the realistic distribution of outcomes is: one more small cut if growth disappoints, a long hold, or, less likely in the near term, a pause that eventually turns into the next hike when the cycle turns. What is almost off the table is another 50 or 75 bps of cuts from here. The deposit-rate cycle is therefore near its floor, not in the middle of a long decline. That single read is why locking the long end now makes sense: you are not trying to time a peak that has already passed, you are trying to lock a floor before the next leg, whenever it comes, and to stop rolling short-dated money at rates that drift lower at each renewal.

How the cut flowed into NRE FDs, and why the curve flattened

NRE fixed deposits are rupee deposits. The bank takes your foreign currency, converts it to rupees, and pays you a rupee rate priced off domestic funding conditions, which track the repo rate. So when the repo rate fell 125 bps, NRE rates followed, though not one-for-one and not instantly. Banks repriced the front of the curve fastest and the long end more grudgingly, which is why the NRE curve has flattened: the gap between a one-year and a five-year NRE rate is now thin.

As of the second quarter of 2026, the best NRE rates for sub-Rs 2 crore deposits cluster between 6.50% and 7.25% across the large banks. SBI's NRE rates run roughly 6.50% to 7.00% depending on tenure. HDFC is competitive in the 15-month to 3-year bucket at around 7.15%. ICICI sits in a similar 6.60% to 7.00% band, with some buckets a touch higher. Kotak has been pricing the short end aggressively, near 7.25% for the one-to-two year tenor. Compare that to late 2024, when 7.5% to 7.75% NRE rates were common, and you can see the full repo cut has landed.

Put real numbers on what the flattening means for your decision. Take Arjun, a UK-based NRI with Rs 40,00,000 maturing from an NRE FD this quarter. His bank offers him 7.10% for one year and 6.95% for five years. The instinct is to take the higher one-year rate and "wait for rates to recover". Look at what that actually does. At 7.10% for one year he earns Rs 2,84,000, after which he must renew at whatever the rate is then, and with the RBI on hold-to-easing, the one-year rate a year from now is more likely to be 6.5% or lower than 7.5% or higher. The 6.95% five-year locks Rs 2,78,000 a year, Rs 13,90,000 over five years, regardless of where the cycle goes. The one-year strategy only wins if rates rise materially and soon, which is the least likely outcome from a 5.25% repo rate with a neutral bias. The 15 bps he gives up in year one is the price of removing reinvestment risk for four more years. At the bottom of a cutting cycle, the small premium on the short end is a trap, not a gift.

NRO rates moved the same way, but the tax math is the real story

NRO deposits, where your India-sourced income (rent, dividends, pension, the proceeds you cannot route through NRE) sits, are priced almost identically to resident domestic FDs and so tracked the same 125 bps down. The NRO headline rates you will see are broadly the same 6.5% to 7.25% band as NRE for the same tenors at the same bank, because they are the same underlying rupee deposit product.

The catch that the repo rate cycle makes worse, and that NRIs consistently underweight, is TDS. NRO interest is taxable in India and the bank deducts TDS at 30% plus surcharge and cess under Section 195, roughly 31.2% to 35.88% depending on your income band, before the interest even reaches you. NRE interest, by contrast, is fully exempt under Section 10(4)(ii) with no TDS. So the post-tax gap between an NRE and an NRO deposit paying the same headline rate is enormous, and it widens in relative terms as rates fall.

Here is the gap on one number. Priya, a US-based NRI, has Rs 20,00,000 she could hold in either an NRO FD or, because the funds are eligible, an NRE FD, both at 7.00%. The NRE FD pays Rs 1,40,000 a year, tax-free in India, full stop. The NRO FD at 7.00% generates the same Rs 1,40,000, but the bank deducts TDS at, say, 31.2%, which is Rs 43,680, leaving Rs 96,320 in hand at source. She can reclaim some of that by filing an Indian return and claiming a US foreign tax credit, but the cash is gone for a year and the credit is rarely a clean wash. On identical headline rates, the NRE deposit delivers roughly 45% more spendable interest at source. The practical instruction in a falling-rate world: move every rupee that is legally eligible for NRE into NRE rather than leaving it in NRO chasing the same headline number. The mechanics of which funds qualify are in NRE versus NRO versus FCNR accounts.

The FCNR swap window is the real 2026 story, and it has a deadline

For years FCNR deposits, where you hold the deposit in USD, GBP, EUR or another foreign currency and bear no rupee risk, were the boring cousin. Their rates are capped by the RBI at a ceiling tied to the overnight Alternative Reference Rate (ARR), which replaced LIBOR: ARR plus 400 basis points for one-to-three year deposits and ARR plus 500 basis points for three-to-five year deposits. Banks rarely priced near that ceiling because hedging the currency back to rupees ate the spread. So before this year, SBI paid about 3.05% on five-year USD FCNR and HDFC about 3.40%, numbers that looked thin next to a 7% NRE FD until you remembered the FCNR carries zero rupee depreciation risk.

In 2026 the RBI changed the arithmetic. Under the FCNR(B) swap window, the central bank bears the full currency-hedging cost on fresh three-to-five year FCNR(B) deposits, and those deposits get CRR and SLR exemptions as well, mirroring the 2013 scheme that pulled in a wave of dollars. With the hedge cost removed, banks can pass roughly 150 to 200 basis points straight through to depositors. The practical result: banks can price USD FCNR at 5.5% and upwards, versus the roughly 3% that prevailed before. For a dollar-earning NRI who has always wanted to avoid rupee risk but balked at 3%, a 5.5%-to-6.5% USD deposit with no currency risk and no Indian tax is the most attractive FCNR pricing in over a decade. The detailed mechanics, eligibility and the bank-by-bank pass-through are in the FCNR swap window 2026 guide.

The deadline is the whole point. The window applies to deposits mobilised up to September 30, 2026, with the facility running to October 16, 2026. After the cut-off, banks lose the RBI's hedge subsidy and FCNR rates revert toward the old 3%-ish reality. This is not an evergreen rate; it is a policy-driven spike with an expiry date.

Put it against the NRE alternative for someone deciding where dollars should sit. Rohan, a Dubai-based NRI, has USD 100,000 to deploy for five years. Option one: convert to rupees and book a five-year NRE FD at 6.95%. Option two: book a five-year USD FCNR under the swap window at, say, 6.00%. The NRE FD pays a higher rupee rate, but he carries the rupee. If the rupee depreciates against the dollar by even 2% a year over five years, which is roughly its long-run trend, that 2% annual drag wipes out most of the 0.95% rate advantage and then some when he eventually repatriates to dirhams. The FCNR at 6.00% pays him in dollars, tax-free in India, with the principal and interest fully repatriable and no conversion risk on the way out. For an NRI whose spending currency is the dollar or a dollar-pegged currency like the dirham, the swap-window FCNR is the better risk-adjusted choice while it lasts. For a UK NRI, the GBP FCNR rate is lower (GBP ARR is lower than USD ARR), so the calculus is closer and the rupee-NRE route is more defensible. The side-by-side is laid out in NRE FD versus FCNR FD.

A rate snapshot for the second quarter of 2026

These are indicative rates as of April 2026 for sub-Rs 2 crore deposits. They move, sometimes weekly, so confirm with the bank before booking. The point of the table is the shape of the choice, not the third decimal.

Deposit type	Currency	Indicative rate (Q2 2026)	India tax on interest	Repatriable	Key watch
NRE FD, 1-3 yr	INR	6.50% to 7.25%	Exempt (Sec 10(4)(ii))	Fully	Rupee depreciation risk on conversion
NRE FD, 5 yr	INR	~6.95%	Exempt	Fully	Curve flat; lock the long end now
NRO FD, 1-5 yr	INR	6.50% to 7.25%	TDS ~31.2%-35.88%	Within USD 1 mn/yr cap	TDS at source; reclaim via return
FCNR(B), 3-5 yr (swap window)	USD	5.5% and upwards	Exempt	Fully	Booked by Sep 30, 2026 only
FCNR(B), 5 yr (pre-window legacy)	USD	~3.0% to 3.4%	Exempt	Fully	Old pricing; avoid booking now
FCNR(B), GBP/EUR	GBP/EUR	Lower (~3% GBP)	Exempt	Fully	Lower ARR; NRE may beat it

Two things the table makes obvious. First, the NRE curve is so flat that there is almost no penalty for going long, which is exactly when you should go long. Second, the swap-window FCNR at 5.5%-plus has closed most of the historic gap to NRE while removing rupee risk, so for the first time in years the currency-safe option is not a big yield sacrifice.

What to actually do about tenure and laddering now

A ladder beats a single bullet deposit in almost every environment, but the right shape of the ladder depends on where you are in the cycle, and right now you are near the floor with a neutral central bank. That argues for a ladder weighted to the long end rather than a symmetric one.

Concretely, for an NRI with, say, Rs 60,00,000 of NRE-eligible money and no near-term need for it, I would not split it into six equal one-through-five year rungs as the textbook says. I would put the larger weight at three and five years to lock today's rates before the next leg of the cycle, and keep a smaller one-year rung purely for liquidity. Something like Rs 10,00,000 at one year, Rs 20,00,000 at three years, and Rs 30,00,000 at five years. The one-year rung gives you cash and the option to redeploy if rates somehow rise; the three and five year rungs do the real work of locking the floor. As each rung matures you roll it back out to five years, so over time the whole ladder earns close to the five-year rate while still throwing off an annual maturity for liquidity. The full mechanics and the standard symmetric version are in NRI fixed deposit laddering.

For the currency split, the swap window forces a one-time decision this year. If your spending and eventual repatriation currency is USD or AED, carve out a meaningful slice, perhaps a third to a half of your long-end money, into a five-year FCNR(B) under the swap window before September 30, 2026, and book the rest as NRE. If your home currency is GBP or you are confident you will eventually spend in rupees in India, the case for FCNR is weaker and a larger NRE allocation is fine. The mistake to avoid is booking a fresh legacy-priced FCNR at 3% now, which has no logic when the swap window is paying 5.5%-plus for essentially the same product for a few more months.

Edge cases

Premature withdrawal when you have locked the long end. Locking five-year NRE money is only sensible for funds you genuinely will not need. NRE FDs allow premature withdrawal, but banks levy a penalty (typically 0.5% to 1%) and, critically, an NRE FD broken before one year earns no interest at all under RBI rules. So keep your emergency buffer in the one-year rung or a savings account, and only term out money you are confident you can leave.

The swap-window FCNR and existing FCNR maturities. If you have an old FCNR maturing in 2026 at the legacy ~3% rate, this is the moment to re-book it into the swap window rather than auto-renew at the old rate. Auto-renewal will roll it into whatever the standard FCNR rate is, which is far below the window rate. Instruct the bank explicitly to re-deploy maturing FCNR into a fresh swap-window deposit before the September 30 cut-off.

Senior-citizen premia do not apply to most NRIs. Resident senior-citizen FD premia (usually 0.50%) generally do not extend to NRE and NRO deposits, so do not assume the extra half-point you have seen advertised applies to your NRI deposit. A few banks offer small NRI-specific or staff premia; ask, but do not count on it.

Rupee forecast risk on the NRE side. Everything above treats the NRE rate advantage as real, and in rupee terms it is. But the moment you intend to repatriate back to a hard currency, the rupee's path becomes part of your return. With the rupee under depreciation pressure in 2026, an NRI who will spend abroad should weight the FCNR option more heavily than the headline rate gap alone suggests. See rupee depreciation and the NRI if that is your situation.

The closing read

The honest read is that the easy money in NRI deposits, the 7.75% NRE FD of late 2024, is gone, and it is not coming back soon. The repo rate at 5.25% with a neutral RBI means deposit rates are near their floor, the front of the curve will keep drifting lower at each renewal, and the long end is flat enough that there is no real penalty for locking it. So for most NRIs with rupee-eligible money and no near-term need: stop rolling short-dated deposits, build a long-weighted ladder, and lock three-to-five year NRE rates now rather than waiting for a recovery that the cycle does not support. Move every NRE-eligible rupee out of NRO, because the 31.2%-plus TDS gap on identical headline rates is the most expensive avoidable mistake on this page. And if you earn and spend in dollars or dirhams, treat the FCNR swap window as the genuine opportunity it is: book a five-year FCNR(B) at 5.5%-plus before September 30, 2026, because it pays nearly an NRE rate with no rupee risk and it expires. The one situation where you should slow down and not just lock everything is if you have a large near-term need for the money in the next year or two; then liquidity beats the extra few basis points, and a shorter, more symmetric ladder is the right call. For everything else, the cycle has told you what to do, and the FCNR window has told you when.

Related guides

• The RBI FCNR swap window 2026, explained
• NRE FD versus FCNR FD: which to choose
• FCNR deposits explained
• NRE, NRO and FCNR accounts compared
• NRI fixed deposit laddering
• Rupee depreciation in 2026 and what it means for NRIs
• Budget 2026: what changed for NRIs
• All News and analysis
• All Banking guides
• All Investments guides

This guide is educational and general in nature. It is not individual financial advice. Deposit rates, the repo rate and the terms of the FCNR swap window change frequently, and the forward-looking views on the rate cycle here are forecasts, not facts. Confirm current rates and window eligibility with your bank, and your tax position with a qualified adviser, before you commit any money.