Foreign banks join NRE deposit rate hike race

A Citibank branch in New York. In India, Citibank on Friday became the first foreign lender to hike interest rates on NRE deposits in the wake of RBI deregulating interest rate. File photo

Citibank on Friday became the first foreign lender to hike interest rates on NRE deposits in the wake of RBI deregulating interest rate offered on deposits by non-resident Indians early this month.

Citi’s rates vary between 5 per cent and 8.75 per cent across maturities, and are lower than the aggressive strategies adopted by domestic lenders who are offering as high as 10 percent per annum.

A deposit of over Rs 30 lakh but under Rs 50 lakh will earn an interest of 8.75 per cent for a 356-400 days bucket and 8.50 percent for 401-1095 days, Citi said in a statement issued here.

Meanwhile, the city-based private lender Development Credit Bank on Friday increased interest rates on non-resident external (NRE) deposits to 10 percent for an 18-month tenor on deposits of Rs 15-50 lakh, making it the highest offering.

For deposits under Rs 15 lakh for the same tenor, the interest rate is 9.75 percent, the bank said.

Almost all the domestic banks, including the country’s largest lender SBI and ICICI have sharply upped their NRE deposit rates in the last fortnight following a Reserve Bank move to deregulate interest rates on NRE deposits earlier this month to attract more dollars into the economy in its bid to arrest the steep fall in rupee.