Banks revise foreign currency deposit rates in response to RBI relaxation last week
SBI, ICICI Bank and IDFC First Bank have raised interest rates on foreign currency non-resident deposits in response to the Reserve Bank’s relaxation last week to shore up forex inflows.
The country’s largest private sector lender HDFC Bank has also revised the rates on foreign currency (non-resident) deposits.
However, it clarified that the revision is not in response to the latest RBI move and it will take a call on revising the rates further going forward.
The largest public sector lender State Bank of India (SBI) has revised the foreign currency non-resident deposits (FCNR) rates on U.S. dollar in the range of 2.85-3.25% per annum on various tenure U.S. dollar deposits with effect from July 10, 2022.
SBI has raised the rate on one-year tenure FCNR USD deposits to 2.85 from 1.80% earlier. For deposits of 3-4 years and 5 years, it has been increased to 3.10% and 3.25%, respectively. The previous rates were 2.30% and 2.45%.
ICICI Bank has revised upwards FCNR by 0.15% on deposits of higher than and equal to $3,50,000 for 12-24 months tenure to 3.50%. The new rate has come into effect from July 13, 2022.
HDFC Bank revised FCNR on USD deposits for tenure of 1 year to less than 2 years at 3.35% with effect from July 9, 2022.
However, a bank official said these rate revisions were not in response to the latest RBI move and it is studying the impact of the relaxation in foreign currency deposits.
Equitas Small Finance Bank also announced the revision of interest rates for fixed and recurring deposits of non-resident external (NRE) account with effect from July 13, 2022.
It has increased NRE interest rate up to 7.40% for NRE FD for 888 days and up to 7.30% for NRE RD for 36 months.
IDFC First Bank has revised the rates on FCNR deposits above $1 million with effect from July 13, 2022. For U.S. dollar deposits, the lender offers an interest rate of 3.50% in deposits ranging from 1 year to less than 5 years. For 5-year tenure USD deposits, it offers 2.50% interest rate.
On July 6, the RBI further liberalised norms to boost inflows of foreign exchange in the country to arrest the fall in the Indian rupee.
Besides relaxing norms on FCNR deposits, it raised overseas borrowing limits for companies and liberalised norms for foreign investments in government bonds to boost foreign exchange inflow.