Private sector lender YES Bank has raised the interest rate on non-resident external (NRE) fixed deposits by 50-75 basis points (bps) and has also increased the rate on foreign currency non-resident (FCNR) deposits. This comes after the Reserve Bank of India (RBI) eased certain norms to aid incremental foreign flows.
Accordingly, the NRE fixed deposit rate for 12-18 months tenure has been revised to 7.01 per cent p.a. The interest rate for tenure exceeding 18 months has been revised to 7.25 per cent. The new rates are for deposits less than Rs 5 crore.
Further, the lender is offering an interest rate of 4.05 per cent on USD FCNR deposits with 12-24 months’ tenure and 4.25 per cent for 24-36 months’ tenure, the bank said in a statement on Friday.
The RBI has taken several steps to attract dollars in a bid to protect the local currency and conserve foreign exchange. It exempted banks from maintaining the cash reserve ratio (CRR) and statutory liquidity ratio (SLR) for incremental NRE (non-residential external) and FCNR (B) (foreign currency non-resident-bank) deposits with effect from the reporting fortnight beginning July 30.
This relaxation will be available for deposits mobilised up to November 4. Banks also have been allowed to raise fresh FCNR (B) and NRE deposits without reference to the regulations on interest rates, with effect from July 7. This relaxation will be available for the period up to October 31, 2022.
“The recent relaxation announced by the RBI to attract forex inflows has allowed us a window to hike interest rates on our NRE and FCNR Fixed Deposit offerings, thus extending the benefit to our customers. This initiative is in alignment to the various strides the Bank has taken in the recent past to benefit customers, which will allow us to further diversify and grow YES Bank’s retail portfolio,” said Prashant Kumar, MD & CEO, YES Bank.