UAE Investors · Advanced Structure

FCNR(B) Leverage Structures

USD-denominated Loan Against Deposit (LAD) facilities secured against your FCNR(B) holding — allowing you to access liquidity or amplify effective yield without breaking the deposit.

All loan rates shown are USD-denominated and SOFR-linked. Indicative as of August 2026. 3M SOFR ≈ 5.30%. Actual all-in rates depend on deposit size, applicant profile, and prevailing benchmark at drawdown. Not financial advice.

The FCNR(B) + USD LAD Structure

A Loan Against Deposit (LAD) allows you to pledge your FCNR(B) deposit as collateral and draw a USD loan against it — typically at 80–90% of the deposit value. The deposit continues earning interest in India while the loan proceeds are deployed elsewhere.

Place FCNR(B) Deposit

Open an FCNR(B) deposit in USD with an Indian bank that has a UAE branch or representative office. The deposit is held in India and earns the agreed fixed rate for the full tenure.

Pledge as Collateral

The deposit receipt is pledged to the UAE branch of the same bank. A lien is marked on the deposit, and the bank issues a USD loan against it — typically 80–90% of the deposit value.

Draw USD Loan

The loan is disbursed in USD — eliminating any currency mismatch between the deposit and the borrowing. Proceeds can be deployed into UAE real estate, business capital, or other USD-denominated investments.

Net Yield Enhancement

If the return on deployed capital exceeds the USD loan rate, the spread is your net yield enhancement on top of the FCNR(B) interest. With current FCNR(B) rates at 6.00–6.80% and USD loan rates at 6.80–7.55%, the structure works best when deployed returns exceed 8–9%.

FCNR Deal — Illustrative Structure

USD 100,000 client equity · 9× leverage · 6.20% deposit rate · 5.40% lending rate · 1.30% fee · 3 years

STRUCTURE

Client Equity (USD)

USD 100,000

Leverage Multiple (× equity)

9×

Loan Amount (Leverage × Equity)

USD 900,000

Total FCNR(B) Deposit (Equity + Loan)

USD 1,000,000

FCNR(B) Deposit Rate (p.a.)

6.20%

All-in Lending Rate (p.a.)

5.40%

Investment Term

3 Years

FEES — Lending Bank

Processing Fee (% of total loan)

1.30%

USD 11,700 one-time

SUMMARY

Total Deposit Interest Earned

USD 201,877

FV = 1,000,000 × (1.031)⁶ · semi-annual compounding

Less: Loan Interest Paid

(USD 145,800)

USD 900,000 × 5.40% × 3 years

Less: Fees

(USD 11,700)

1.30% of USD 900,000 loan

Net Earnings (excluding client equity)

USD 44,377

Pure profit on the structure

Net Earnings (including client equity returned)

USD 144,377

Equity of USD 100,000 returned at maturity

Annualised Yield to Client14.79% p.a.

Deposit interest uses semi-annual compounding: FV = P × (1 + r/2)^(2n). Loan interest is simple interest on outstanding balance. Fee is one-time on loan amount at drawdown. Deployed return is illustrative only — actual returns are not guaranteed. Subject to availability of limits. This is not financial advice.

** Subject to availability of limits

Structure a Leverage Position

Our advisory team can help you model the carry, identify the right bank, and navigate the lien marking process.

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