As banks raise their interest rates on deposits and loans in India amid tighter monetary policy, lenders are also raising rates for foreign depositors. Private sector lender Yes Bank has now raised interest rates on its fixed deposits for the Non-Resident External Account (NRE) by 50 to 75 basis points.
The move comes after the RBI in July temporarily allowed banks to raise new FCNR(B) and NRE deposits without reference to existing interest rate regulations, effective July 7. This easing will be available for the period up to October 31.
Interest rates on non-resident foreign banks in foreign currencies [FCNR(B)] deposits, without these easings, are subject to alternative overnight benchmark rate caps (ARR) for the respective currency/swap plus 250 basis points for deposits with a maturity of 1 year to less than 3 years and overnight ARR plus 350 basis points for deposits of 3 years and over and up to 5 years in maturity. In the case of NRE deposits, in accordance with current instructions, interest rates should not be higher than those offered by banks on comparable term deposits in national rupees.
According to the Yes Bank website, the interest rate for NRE deposits for a term of 12 months to less than 18 months has been revised to 7.01% per annum. The interest rate for terms longer than 18 months has been revised to 7.25% per year. All these revised rates are applicable for deposits below Rs 5 crore.
It also offers a maximum rate of 4.25% per annum on FCNR deposits in dollars for a term of 24 months to less than 36 months.
Yes Bank CEO Prashant Kumar said, “At Yes Bank, innovation and customer focus have always been at the core of our banking initiatives. We are constantly striving to provide the best benefits to all of our customers in all segments. The recent easing announced by the RBI to attract foreign exchange inflows has enabled us to raise interest rates on our NRE and FCNR fixed deposit offerings, extending the benefits to our customers. This initiative is in line with the various advances that the Bank has undertaken in recent years for the benefit of customers, which will allow us to further diversify and develop Yes Bank’s retail portfolio.
An FCNR deposit account is a fixed foreign currency deposit account that allows NRIs to earn tax-free interest on their investment. FCNR(B) is held in foreign currency and is an investment option for NRIs/People of Indian Origin/Indian Overseas Citizens looking to hold their money in foreign currency for good returns. This can help avoid currency risk, ensuring high and guaranteed returns.
Read all Latest business news and recent news here