Mumbai: Competition among banks to attract foreign currency deposits from Non-Resident Indians (NRIs) has intensified after the Reserve Bank of India (RBI) announced a special dispensation aimed at boosting US dollar inflows, prompting several lenders to sharply raise interest rates on Foreign Currency Non-Resident (Bank) [FCNR(B)] deposits. The RBI's recent measures include exemption from CRR and SLR requirements on incremental FCNR(B) deposits mobilised under the scheme and a facility under which the central bank will bear the hedging cost on eligible deposits, making it more attractive for banks to garner overseas funds.
According to interest rates published on the websites of various banks, smaller and mid-sized lenders have led the rate hikes, with some offering more than 7 per cent on US dollar FCNR(B) deposits with tenures of three to five years.
