NEW DELHI: SBI, ICICI Bank and IDFC First Bank have hiked interest rates on foreign currency deposits by non-residents in response to the Reserve Bank’s easing last week to bolster foreign exchange inflows. The country’s largest private lender, HDFC Bank, has also revised interest rates on foreign currency (non-resident) deposits.
However, it clarified that the review is not a reaction to the recent RBI move and there will be a call for further rate review.
The largest public sector lender, State Bank of India (SBI), has set rates on non-resident foreign currency deposits (FCNR) in US dollars in a range of 2.85 to 3.25 percent per annum for various US dollar denominations. Deposits revised as of July 10, 2022.
SBI has raised the interest rate on FCNR USD one-year deposits to 2.85 percent from the previous 1.80 percent. For deposits of 3-4 years and 5 years it was raised to 3.10 percent and 3.25 percent respectively. The previous rates were 2.30 percent and 2.45 percent.
ICICI Bank has revised FCNR upwards by 0.15 percent to 3.50 percent for deposits of $350,000 or more with maturities of 12 to 24 months. The new tariff will apply from July 13, 2022.
HDFC Bank has revised the FCNR for USD deposits with a maturity of 1 year to less than 2 years to 3.35 percent effective July 9, 2022.
However, a bank official said these rate revisions are not in response to the recent RBI move and the impact of easing on foreign currency deposits is being studied.
Equitas Small Finance Bank also announced the revision of interest rates on fixed and recurring deposits from Non-Resident External (NRE) accounts, effective July 13, 2022.
It has increased the NRE interest rate to 7.40 percent for 888-day NRE FD and up to 7.30 percent for 36-month NRE RD.
IDFC First Bank revised interest rates on FCNR deposits over $1 million effective July 13, 2022. For US dollar deposits, the lender offers an interest rate of 3.50 percent for deposits with a maturity of 1 year to less than 5 years. For USD deposits with a maturity of 5 years, it offers an interest rate of 2.50 percent.
On July 6, the RBI further liberalized norms in a bid to boost foreign exchange inflows into the country and halt the decline in the Indian rupee.
In addition to easing FCNR deposit norms, overseas corporate borrowing limits have been raised and norms for foreign investment in government bonds have been liberalized to stimulate foreign exchange inflows.