Interest rates on foreign currency non-resident deposits have been raised by India’s top banks, including SBI, ICICI Bank, and IDFC First Bank. This is in response to the Reserve Bank’s last-week relaxation in order to boost forex inflows.
The rates on foreign currency (non-resident) deposits have also been revised by the country’s largest private sector lender, HDFC Bank. However, it has clarified that the revision is not in response to the latest RBI move and that it will decide whether to revise rates further in the future.
With effect from July 10, 2022, the largest public sector lender, State Bank of India (SBI), has revised the foreign currency non-resident deposits (FCNR) rates on US dollar deposits in the range of 2.85-3.25 percent per annum on various tenure US dollar deposits.
SBI increased the rate on one-year FCNR USD deposits to 2.85 percent from 1.80 percent previously. It has been raised to 3.10 percent and 3.25 percent for deposits of 3-4 years and 5 years, respectively. The previous rates were 2.30 percent and 2.45 percent, respectively.
ICICI Bank has increased the FCNR on deposits greater than and equal to USD 350,000 for a period of 12-24 months to 3.50 percent. The new rate went into effect on July 13, 2022.
With effect from July 9, 2022, HDFC Bank reduced the FCNR on USD deposits with a term of one year to less than two years to 3.35 percent.
However, a bank official stated that these rate changes were not in response to the latest RBI move, and that the bank is investigating the impact of the relaxation of foreign currency deposits.
Equitas Small Finance Bank also announced that interest rates on fixed and recurring deposits in Non Resident External (NRE) accounts will be revised beginning July 13, 2022.
It has raised the NRE interest rate to 7.40% for NRE FD for 888 days and 7.30% for NRE RD for 36 months.
IDFC First Bank has revised its FCNR deposit rates above USD 1 million, effective July 13, 2022. The lender offers a 3.50 percent interest rate on US dollar deposits with terms ranging from one year to less than five years. It offers a 2.50 percent interest rate on 5-year USD deposits.
On July 6, the RBI further liberalised rules in order to increase foreign exchange inflows into the country and halt the fall of the Indian rupee.
To increase foreign exchange inflows, it relaxed FCNR deposit rules, increased corporate overseas borrowing limits, and liberalised rules for foreign investments in government bonds.
Disclaimer:- Whatever information is given is for educational purposes only and all the information given is taken from the entire official website.