SBI, ICICI, other banks hike FCNR deposit rates

Several banks, including ICICI and SBI, on Thursday launched a new Foreign Currency Non-Resident (FCNR (B)) deposit scheme offering higher interest rates for Non-Resident Indians. The NRI fixed deposit interest rate hikes came within days of the RBI announcing a foreign currency swap window for banks till September 30, thus effectively absorbing the currency hedging cost that banks had to bear on such deposits and leaving room for banks to raise deposit rates. The move is aimed at attracting foreign currency deposits from Non-Resident Indians (NRIs), and experts believe that about USD 60-70 billion foreign capital could flow in under the deposit scheme.

Following this, ICICI Bank, on its website, said it is offering 6.50 per cent interest on NRI fixed deposits effective June 11. State Bank of India (SBI) announced a new SBI Advantage FCNR(B) deposit scheme available in USD for a 3–5-year tenure with a lock-in period of 1 year.

Deposits above USD 1 million for 3-4 years will attract 5.5 per cent interest, while 4-5 years (5.75 per cent interest), and those with 5 years tenure will attract 6 per cent interest. Bank of Baroda (BoB) said it is offering higher interest rates for deposits in the 3-to-5-year maturity bucket across major foreign currencies, including the US Dollar (USD), British Pound Sterling (GBP), Euro, Australian Dollar (AUD) and Canadian Dollar (CAD) under the new FCNR (B) Deposit Scheme. Customers would earn up to 6 per cent on USD deposits, 4.75 per cent on GBP and AUD deposits, 5.15 per cent on CAD deposits and 3.75 per cent on Euro deposits with effect from June 11. Kotak Mahindra Bank on its website said that FCNR (B) deposit interest rates, with effect from June 11, will be 6 per cent for 3–5-year deposits less than USD 1 million, and 6.15 per cent for deposits more than USD 1 million.