As banks are raising their interest rates on deposits and loans in India amid the monetary policy tightening, the lenders are also raising the rates for overseas depositors as well. Private sector lender Yes Bank has now hiked interest rates on its fixed deposits for non-resident external (NRE) account by 50-75 basis points.
The move comes after the RBI in July temporarily allowed 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.
Interest rates on Foreign Currency Non-Resident Bank [FCNR(B)] deposits, without these relaxations, 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 shall not be higher than those offered by the banks on comparable domestic rupee term deposits.
According to Yes Bank’s website, the interest rate for NRE deposits for the tenure of 12 months to less than 18 months has been revised to 7.01 percent per annum. The interest rate for the tenure greater than 18 months has been revised to 7.25 per cent per annum. All these revised rates are applicable for deposits less than Rs 5 crore.
It is also offering a peak rate of 4.25 per cent per annum on dollar FCNR deposits for the tenure of 24 months to less than 36 months.
Yes Bank CEO Prashant Kumar said, “At Yes Bank, driving innovation and customer-centricity has always been at the core of our banking initiatives. We constantly strive to provide the best-in-class benefits to all our customers across segments. The recent relaxation announced by the RBI to attract forex inflows has allowed us a window to hike interest rates on our NRE and FCNR fixed deposit offerings, thus extending the benefit to our customers. This initiative is in alignment to the various strides the Bank has taken in the recent past to benefit customers, which will allow us to further diversify and grow Yes Bank’s retail portfolio.”
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 to retain their money in foreign currency for good returns. It can help in avoiding foreign currency exchange risk, ensuring high and guaranteed returns.
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