Banks such as SBI, HDFC Bank, ICICI Bank and IDFC First Bank have increased their foreign currency non-resident deposits (FCNR) in response to the RBI’s move to increase foreign exchange inflows while ensuring overall macroeconomic and financial stability. RBI plans to control depreciation of Indian Rupee through these measures. Banks revised their FCNR rates after RBI relaxed norms and allowed them to make fresh FCNR(B) and NRE deposits without reference to the existing norms on interest rates with effect from July 7, 2022.
from 10th July, State Bank Of India Modified your FCNR on different currencies like USD, GBP, EUR, CAD, AUD and JPY. The interest rate on USD deposits ranges from 2.85% to 3.25%. For FCNR(B) deposits of 1 year, simple interest is applicable, while for FCNR(B) deposits of more than 1 year, the interest is compounded at half-yearly frequency.
SBI hikes one-year FCNR USD deposit from 1.8% to 2.85%, while the rate has been increased to 3.10% for 3-4 year tenure and 3.25% for 5-year tenure, from the previous 2.30 % and 2.45%. The rate is 3% on tenure of 2 years to less than 3 years and 3.15% on tenure of 4 years to less than 5 years.
During this, ICICI Bank FNCR has revised its interest rates for currencies such as USD, GBP, CAD, AUD, SGD and HKD. The new rates have come into effect from July 11, 2022.
ICICI offers a rate of 2.5% on FCNR deposits of less than USD 350,000 for tenors ranging from 12 months to more than 60 months. Deposits over US$350,000 are 3.35% for 12 months to 24 months, while the balance is 2.50% for tenors.
From July 9, HDFC Bank is offering 2% on FNCR deposits from USD 1 million to USD 20 million over a tenure of 1 year. The rate remains the same from 1 year 1 day to less than 2 years.
IDFC First Bank hikes interest rates on FCNR deposits above Rs 10 lakh. In USD deposits, the bank is offering a rate of 3.5% on maturity from 1 year to less than 5 years. Whereas on the tenure of 5 years this rate is 2.5%. No interest will be paid if the FCNR deposit is prematurely withdrawn within 1 year of deposit. Interest on FCNR deposits is compounded at an interval of 180 days and thereafter for the remaining actual days. The principal is increased to include the interest earned during the last 180 days.
On July 6, the RBI announced to temporarily allow banks to make fresh FCNR(B) and NRE deposits without reference to the existing rules on interest rates with effect from July 7, 2022. This discount will be available for the period till 31st October. , 2022.
Generally, the interest rates on the foreign currency non-resident bank [FCNR(B)] Deposits are subject to a ceiling of Overnight Alternate Reference Rate (ARR) for the respective currency/swap and 250 basis points for deposits with maturities of 1 year to less than 3 years and overnight ARR for deposits of 3 years and above plus 350 basis points. Till maturity of 5 years. In the case of NRE deposits, the interest rates offered by banks on comparable domestic rupee fixed deposits, as per extant instructions, shall not exceed.
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