State-run Canara Bank on Tuesday launched a Special Foreign Currency Non-Resident (Bank) or  FCNR(B) Deposit Scheme offering interest rates of up to 6.50% per annum on US Dollar deposits for tenures ranging from three to five years. The scheme, effective June 11, comes with a one-year lock-in period.

The special deposit scheme will be available in multiple foreign currencies, including the US Dollar (USD), British Pound Sterling (GBP), Euro (EUR), Canadian Dollar (CAD) and Australian Dollar (AUD). The bank is also offering loans against FCNR(B) deposits under the scheme.

“The FCNR(B) Special Deposit Scheme is tailor-made to provide our NRI customers with the benefit of earning competitive interest on their foreign currency deposits. This scheme is very convenient, tax-efficient, and easy to withdraw funds, making an excellent investment option for our customers abroad,” said Bhavendra Kumar, Executive Director, Canara Bank.

The launch follows the Reserve Bank of India’s recent measures aimed at attracting higher foreign currency inflows into the country. FCNR(B) deposits allow NRIs to maintain deposits in foreign currencies with Indian banks and earn returns in the same currency.

Both the principal and interest are fully repatriable, enabling depositors to transfer funds overseas without restrictions. In addition, interest earned on FCNR(B) deposits is exempt from income tax in India, enhancing their appeal as an investment avenue for overseas Indians.