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.Īn FCNR deposit account is a fixed deposit account for foreign currency that allows NRIs to earn tax-free interest on their investment. Without these relaxations, interest rates on Foreign Currency Non-Resident Bank deposits 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. This relaxation will be available for the period up to October 31. Last week, the RBI decided to temporarily permit banks to raise fresh FCNR(B) and NRE deposits without reference to the extant regulations on interest rates, with effect from July 7. The measure was taken by the RBI to attract foreign funds and bolster the rupee. Several banks, including HDFC Bank, State Bank of India and ICICI Bank have revised their FCNR deposits after the Reserve Bank of India (RBI) last week temporarily allowed the lenders to accept new FCNR(B) NRE deposits from non-resident Indians (NRIs) without interest rate limits.
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