Banks revise foreign currency deposit rates in response to RBI's move

SBI, ICICI Bank and IDFC First Bank have raised interest rates on foreign currency non-resident deposits in response to the Reserve Bank's relaxation last week to shore up forex inflows.

The country's largest private sector lender HDFC Bank has also revised the rates on foreign currency (non-resident) deposits.

However, it clarified that the revision is not in response to the latest RBI move and it will take a call on revising the rates further going forward.

The largest public sector lender State Bank of India (SBI) has revised the foreign currency non-resident deposits (FCNR) rates on US dollar in the range of 2.85-3.25 per cent per annum on various tenure US dollar deposits with effect from July 10, 2022.

SBI has hiked the rate on one-year tenure FCNR USD deposits to 2.85 from 1.80 per cent earlier. For deposits of 3-4 years and 5 years, it has been hiked to 3.10 per cent and 3.25 per cent, respectively. The previous rates were 2.30 per cent and 2.45 per cent.

ICICI Bank has revised upwards FCNR by 0.15 per cent on deposits of higher than and equal to USD 350,000 for 12-24 months tenure to 3.50 per cent. The new rate has come into effect from July 13, 2022.

HDFC Bank revised FCNR on USD deposits for tenure of 1 year to less than 2 years at 3.35 per cent with effect from July 9, 2022.

However, a bank official said these rate revisions were not in response to the latest RBI move and it is studying the impact of the relaxation in foreign currency deposits.

Equitas Small Finance Bank also announced the revision of interest rates for fixed and recurring deposits of Non Resident External (NRE) account with effect from July 13, 2022.

It has increased NRE interest rate up to 7.40 per cent for NRE FD for 888 days and up to 7.30 per cent for NRE RD for 36 months.

IDFC First Bank has revised the rates on FCNR deposits above USD 1 million with effect from July 13, 2022. For US dollar deposits, the lender offers an interest rate of 3.50 per cent in deposits ranging from 1 year to less than 5 years. For 5-year tenure USD deposits, it offers 2.50 per cent interest rate.

On July 6, the RBI further liberalised norms to boost inflows of foreign exchange in the country to arrest the fall in the Indian rupee.

Besides relaxing norms on FCNR deposits, it raised overseas borrowing limits for companies and liberalised norms for foreign investments in government bonds to boost foreign exchange inflow.