Many banks including HDFC Bank, State Bank of India And ICICI Bank last week revised its FCNR deposits after the Reserve Bank of India (RBI) temporarily allowed lenders to accept fresh FCNR(B) NRE deposits from non-resident Indians (NRIs) without interest rate cap. . RBI had taken this step to attract foreign funds and strengthen the rupee.
Last week, the RBI decided 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. This discount will be available for the period till 31st October.
Without these exemptions, 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.
What are FCNR Deposits?
FCNR deposit account is a fixed deposit account for foreign currency that allows NRIs to earn tax-free interest on their investments. FCNR(B) is denominated in foreign currency and is an investment option for NRIs/Persons of Indian Origin/Foreign Citizens of India who wish to maintain their money in foreign currency for good returns. This forex exchange can help in avoiding risk, ensuring high and guaranteed returns.
Latest FCNR Rates of SBI, HDFC Bank and ICICI Banks:
According to the State Bank of India website, the interest rates for FCNR deposits for dollar currency range between 2.85 per cent to 3.25 per cent. These are the revised rates with effect from July 10. Simple interest is applicable on one year FCNR deposits; Whereas on deposits of more than one year, the interest is compounded on a half-yearly basis.
According to the HDFC Bank website, the interest rates on FCNR deposits for dollar currency range between 2 per cent to 3.35 per cent. The bank has revised the FCNR rates with effect from July 9, 2022. According to the HDFC Bank website, “Effective July 1, 2021, FCNR deposits for GBP, EUR and JPY currencies will be offered for a tenure of 1-year only. GBP for a period of 1 year 1 day to 5 years, Existing FCNR deposits booked under Euro and JPY currencies and which are payable for auto-renewal will automatically renew for a period of 1 year by default.
ICICI Bank has also revised its interest rates on FNCR for currencies like GBP, USD, CAD, SGD, AUD and HKD. The new rates have come into effect from July 11, 2022. It now offers a rate of 2.5 percent on FCNR deposits of less than $350,000 for tenors ranging from 12 months to 60 months. On deposits over $350,000, the rate is 3.35 percent for the 12-month to 24-month term, compared to 2.50 percent for the rest of the term.
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