SynopsisIndian banks have significantly increased interest rates on foreign currency deposits for Non-Resident Indians, with some hikes reaching 350 basis points. This move follows the Reserve Bank of India's decision to bear hedging costs for longer-term deposits, aiming to attract dollar inflows and support the rupee. Several major lenders have already announced higher rates, with more expected this week.APMUMBAI: Some banks raised rates on foreign currency deposits for non-resident Indians by as much as 350 basis points on Wednesday, seeking to attract dollar inflows after the central bank eased regulatory restrictions last week. The Reserve Bank of India will bear the full hedging cost for three- to five-year non-resident deposits, it said on Friday, as part of a broader set of measures to encourage overseas flows and stem weakness in the rupee. The unit is Asia's second-worst-performing currency this year, down 6% so far, and had slipped to record lows in May.Also Read| RBI raises investment limits for NRIs, OCIs; Extends equity route to overseas individuals HDFC Bank, India's largest private sector lender, hiked rates by 300 basis points to 6% on three- to five-year deposits. AU Small Finance Bank increased rates by 195 bps, offering 7.1% on three-year deposits and 7% on five-year deposits. Yes Bank has set the rate at 7% on three-year deposits, 7.05% on four-year deposits and 7.10% on five-year deposits, according to a Bloomberg report on Wednesday. A Yes Bank spokesperson did not respond to Reuters' request for comment. Other banks are expected to announce their new rates this week. Lenders could raise as much as $35 billion to $40 billion via these foreign currency deposits until September this year, according to a Reuters report. The RBI said it is also open to banks providing guarantees to offshore lenders to lend to NRIs, who can place these borrowed funds as deposits. The RBI had last launched a concessional forex swap facility for non-resident Indians in 2013 when the rupee had depreciated sharply due to the U.S. Federal Reserve's "taper tantrum". Under that scheme, HDFC Bank mobilised $3.4 billion, followed by ICICI Bank, SBI and select foreign banks. (Join our ETNRI WhatsApp channel for all the latest updates)...moreElevate your knowledge and leadership skills at a cost cheaper than your daily tea.Subscribe Now
Some lenders hike rates on FX deposits for non-resident Indians - The Economic Times
Indian banks have significantly increased interest rates on foreign currency deposits for Non-Resident Indians, with some hikes reaching 350 basis points. This move follows the Reserve Bank of India's decision to bear hedging costs for longer-term deposits, aiming to attract dollar inflows and support the rupee. Several major lenders have already announced higher rates, with more expected this week.
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