NEWS & ADVICE : FIXED DEPOSITS
NRI deposit rates raised by most banks
By Neelima Shankar
Nov 19, 2008
Print    Email    RSS   

With the view to attract foreign currency into the country, most banks have raised their NRI deposit rates by 75 basis points. The decision comes from RBI's move to increase ceiling on interest rate of foreign currency non-resident (FCNR) deposits by 75 basis points. The regulator has raised this rate to London Inter Bank Offered Rate (Libor) plus 100 points.

The ceiling on non-resident (external) rupee accounts (NRE) has also been increased by 75 basis points to Libor plus 175 basis points. Since October 2008, the interest rate ceilings on FCNR (B) and NRE term deposits have been raised by 100 basis points each.

The largest private lender, ICICI Bank has revised the interest rates on FCNR (B) and NRE deposits. The FCNR (B) deposit in US dollar has seen a 75 basis point rise to 4.17% in one year tenure. For deposit in the denomination of British pound, the interest rate is raised to 7.01%. On the other hand NRE deposit rate of one-year maturity has also been increased by 75 basis points to 4.17%. All these rates are effective from November 18th.

Even the largest public lender, State Bank of India has raised interest rates on FCNR and NRE deposits with effect from November 17th. The FCNR (B) deposit rates in dollar denomination for one year to less than two years have been increased to 4.17% from 3.42%. For deposits with maturity of two years and above but less than three years, the new rate is raised to 3.66% against 2.91% earlier. Deposits with tenure of three years and above but less than four years and four years and above but less than five years, the rates have been increased to 4.14% and 4.49% respectively.

The NRE deposit rate for deposits in the range of one to less than two years has been increased to 4.92% from the earlier 4.17%. Similarly for deposits in the range of two years to less than three years and three years to five years, the rate has been increased to 4.41% from 3.66% and 4.89% from the earlier 4.14% respectively.

During the end of half year of current fiscal, banks have recorded a net outflow of $720 million from FCNR (B) deposits and $780 million from NRE deposits.

The other banks that have raised their interest rates on its foreign currency and rupee deposits by non-residents include Bank of Baroda and Punjab National Bank. Even HDFC bank is expected to revise its rates soon.

A Bank of Baroda (BoB) official said that the economy is facing a shortage of dollar resources and therefore a rise in these deposits may attract NRIs to park funds in India as interest rates in developed nations are moving southwards. However it is too early to see the effect of such a change.


(Comments Posted : 0) Post Your Comments
Show All Comments
COMPARE QUICKLY
 Select a product:
 

CALCULATE QUICKLY
 Select a product:
 

EDITORS' PICKS
Planning to invest in a bank FD? Think again
Do you know what led banks to calibrate...
FD: Opportunity for retirees to diversify...
Some Quick Facts about Wealth Tax in India!
Credit profile and its effect on loan...


MEXING: CaℒL Giℛℒ In Hoshiarpur 09855660911...
Sakeela.CaℒL Giℛℒs In Kharar 0985566O911...
NANGAL: CaℒL Giℛℒ In Una 09855660911 Escoℛt...

NEWS THIS WEEK
Federal Bank launched V connect for its customers Feb 12, 2015
Andhra Bank on expansion mode Feb 11, 2015
Dena Bank earned a profit of 13%. Feb 9, 2015
Banks expected to cut down the rates Feb 5, 2015
RBI kept the rates unchanged Feb 4, 2015
News Archive