SynopsisTo incentivise foreign currency inflows, the Reserve Bank of India will swap fresh dollar term deposits raised until end-September at par. In effect, the RBI will bear the entire hedging cost on deposits mobilised under the Foreign Currency Non-Resident (Bank), or FCNR(B), scheme. In line with the RBI's expectations, banks are passing on almost the entire benefit to depositors, making these deposits more attractive.IANSFOMO sets in Some customers seen moving funds to other banks to cash in on new FCNR schemeMUMBAI: Commercial banks have sought approval from the banking regulator to allow existing non-resident Indian customers to prematurely withdraw and rebook deposits to take advantage of the time-bound FCNR deposit scheme, which in some cases offers almost double the returns of regular term deposits.Some large depositors are instructing their banks to prematurely close term deposits and redeploying the funds in other banks, bankers said.Banks are offering between 6% and 7.1% for three- to five-year deposits under the special scheme, compared with 3.35% to 4% previously."Some of our prime depositors are moving to other banks...In the long run, we may lose our relationship with these customers," said a banker cited above.To incentivise foreign currency inflows, the Reserve Bank of India will swap fresh dollar term deposits raised until end-September at par. In effect, the RBI will bear the entire hedging cost on deposits mobilised under the Foreign Currency Non-Resident (Bank), or FCNR(B), scheme. In line with the RBI's expectations, banks are passing on almost the entire benefit to depositors, making these deposits more attractive.Banks seek RBI nod on Guarantee Rule to boost NRI deposit inflowsHowever, the RBI has said that its incentive is applicable only to fresh and matured deposits. That means existing deposits will continue to earn lower rates."Those who have created deposits in the last two to three months are the most aggrieved, as they are missing out on better returns," said a banker. "We are buying time from them, hoping the RBI will agree," he added.
Banks seek RBI nod to let NRIs break & rebook existing deposits - The Economic Times
To incentivise foreign currency inflows, the Reserve Bank of India will swap fresh dollar term deposits raised until end-September at par. In effect, the RBI will bear the entire hedging cost on deposits mobilised under the Foreign Currency Non-Resident (Bank), or FCNR(B), scheme. In line with the RBI's expectations, banks are passing on almost the entire benefit to depositors, making these deposits more attractive.
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