HDFC Bank offering 6.80 per cent interest on NRE deposits worth Rs 2 crore to less than Rs 150 crore for tenures ranging from 12 months to 15 months
After the Reserve Bank of India (RBI) recently allowed banks to accept new FCNR(B) NRE deposits from non-resident Indians (NRIs) without interest rate limits, several lenders raised their interest rate offerings to attract foreign funds. Now, HDFC Bank, the country’s largest private sector lender, has set up a two-day window on Wednesday and Thursday for NRE deposits offering higher interest rates, according to a media report.
The window offers an annual rate of 6.80 per cent on NRE (non-resident external) deposits worth Rs 2 crore to less than Rs 150 crore for tenures ranging from 12 months to 15 months, according to the Business Standard report quoting sources. For domestic deposits worth Rs 2 crore to less than Rs 5 crore with a tenure of one year to less than 15 months, HDFC Bank currently offers 6.25 per cent.
Read More: Piramal Enterprises gets RBI nod to start NBFC business
Earlier this month, the RBI decided to temporarily permit banks to raise fresh FCNR(B) and NRE deposits without reference to the extant regulations on interest rates, with effect from July 7. This relaxation will be available for the period up to October 31. The decision was aimed at attracting foreign funds and bolster the rupee, which has touched multiple all-time low levels in the past few months.
Without these relaxations, interest rates on Foreign Currency Non-Resident Bank [FCNR(B)] deposits are subject to ceilings of overnight alternative reference rate (ARR) for the respective currency/ swap plus 250 basis points for deposits of 1 year to less than 3 years maturity and overnight ARR plus 350 basis points for deposits of 3 years and above and up to 5 years maturity. In the case of NRE deposits, as per extant instructions, interest rates will not be higher than those offered by the banks on comparable domestic rupee term deposits.
Recently, after the RBI measures, several banks, including State Bank of India, HDFC Bank and ICICI Bank revised their FCNR deposits.
Read More: Axis Bank-Citi Deal: Know What It Means For Citi Debit, Credit Card Customers
SBI now offers interest rates for FCNR deposits in the range of 2.85 per cent to 3.25 per cent for the dollar currency. These are the revised rates effective July 10. On the one-year FCNR deposit, simple interest is applicable; while for deposits for above one year, interest is compounded on a half-yearly basis.
ICICI Bank also revised its interest rates on FNCR for currencies like GBP, USD, CAD, SGD, AUD, and HKD, effective from July 11, 2022. It now offers a 2.5 per cent rate on FCNR deposits below $350,000 on tenures above 12 months to 60 months. Above $350,000 deposits, the rate is 3.35 per cent on 12 months to 24 months tenure, while remaining tenures have 2.50 per cent.
An FCNR deposit account is a fixed deposit account for foreign currency that allows NRIs to earn tax-free interest on their investment. FCNR(B) is held in foreign currency and is an investment option for NRI/ persons of Indian origin/ overseas citizens of India who are looking at retaining their money in foreign currency for good returns. It can help in avoiding foreign currency exchange risk, ensuring high and guaranteed returns.
