State Bank of India, the country’s largest lender, has raised interest rates on its Foreign Currency Non-Resident (Bank), or FCNR(B), deposits by 105 basis points for one-year US dollar deposits, data on the lender’s website showed.
The one-year US dollar deposit interest rate is now 2.85 percent, up from 1.80 percent.
As per the data on SBI’s website, the interest rate on five-year US dollar deposits was increased to 3.25 percent. Data from Paisabaaar.com showed the previous interest rate was 2.45 percent.
As such, the US dollar FCNR(B) deposit rates have been raised by 80-105 basis points across all tenures.
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The revised deposit rates are effective July 11.
The move by SBI comes days after the Reserve Bank of India (RBI), on July 6, announced a series of measures to boost forex inflows and alleviate pressure on the rupee’s exchange rate. These included greater freedom to banks to raise foreign currency deposits from non-residents, such as the removal of the interest cap on these deposits.
The measures came in the wake of the rupee hitting record low against the dollar practically every day.
Experts had expected the deposit rate hike to be in the range of 25-30 basis points. As such, the rate hike is far more than anticipated.
The revised FCNR(B) deposit rates are as follows for all six currencies:
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US dollar
Pound sterling
Euro
Canadian dollar
Australian dollar
Yen
1 year
2.85%
2.00%
0.01%
2.30%
1.20%
0.02%
Above 1 year to less than 2 years
2.85%
2.00%
0.01%
2.30%
1.20%
0.02%
2 years to less than 3 years
3.00%
2.35%
0.01%
2.87%
1.70%
0.05%
3 years to less than 4 years
3.10%
2.45%
0.01%
3.12%
2.05%
0.05%
4 years to less than 5 years
3.15%
2.45%
0.10%
3.17%
2.30%
0.05%
5 years
3.25%
2.45%
0.15%
3.17%
2.45%
0.05%
