India's largest private lender, ICICI Bank has also announced a hike in the interest rates for NRE term deposits and FCNR deposits on late Monday evening. The bank raised the interest rates by 0.50%, effective from September 17.

Earlier other banks have also announced similar cuts.

The one-year NRE deposit rate has been increased by 50 basis points to 3.71%. For FCNR (B) deposits denominated in US dollar, the interest rate for one-year has been increased by 50 bps to 2.96 % whereas for FCNR (B) deposit denominated in British pound, the rate has been increased to 5.77 percent from 5.27 percent.

ICICI has also made similar revisions in deposits made in currencies like Euro, Japanese Yen, Australian Dollar and Canadian Dollar.

The decision comes in wake of the Reserve Bank of India's recent measures to overcome the momentary pressure due to a fall in the Wall Street. Banks raised interest rates on non-resident deposits after RBI lifted the ceiling on rates by 50 basis points to attract more foreign funds into the country.

ICICI Bank lost around Rs 375 crore (57 million Euro) by the bankruptcy of US major Lehman brothers. ICICI's UK subsidiary had invested 57 million Euro in bonds of Lehman Brothers.