The impact of the incentives given by RBI to bring more foreign currency into the country is now visible on the banks. SBI and Bank of Baroda (BoB) have increased the interest rates on their FCNR(B) deposit schemes. With this, Indians living abroad (NRIs) will be able to get higher returns on their dollar deposits than before.
NRIs now invest in US dollars (USD) under new interest rates FCNR(B) Deposit But you can get returns up to 6%. This is much higher than the earlier interest rate of around 3.35%. That means in some cases the interest rate has increased by up to 2.65%. Before this, HDFC Bank, Yes Bank and AU Small Finance Bank have also increased the interest rates on FCNR deposits.
SBI’s new FCNR Advantage Scheme
SBI has launched FCNR(B) Advantage Deposit Scheme. Under this scheme, on deposits up to 1 million dollars (1 million USD), interest will be given at 5.25 percent for tenure of 3 years to less than 4 years, 5.50 percent for tenure of 4 years to less than 5 years and 5.75 percent for tenure of 5 years. At the same time, on deposits of more than 10 lakh dollars, interest can be given up to a maximum of 6 percent for 5 years.
BoB also increased interest rates
Bank of Baroda has also changed the FCNR(B) interest rates on major foreign currencies like US Dollar (USD), British Pound (GBP), Euro (EUR), Australian Dollar (AUD) and Canadian Dollar (CAD). Under the new scheme, the bank is giving returns up to 6 percent on US dollar deposits, up to 4.75 percent on British pound and Australian dollar deposits, up to 5.15 percent on Canadian dollar deposits and up to 3.75 percent on euro deposits.
Banks benefit from RBI relief
According to Beena Waheed, Executive Director of Bank of Baroda, the recent steps of RBI have made it easier for banks to raise foreign currency from NRI customers. This will help in increasing FCNR (B) deposits and strengthening the rupee. Also, NRI customers will get the opportunity of better returns on their foreign currency deposits. Recently RBI has relaxed some rules related to FCNR (B) deposits and foreign loans (ECB). Its objective is to bring more foreign currency into India and make it easier to raise dollar funds. For this reason, banks are now offering more attractive interest rates to NRI customers.
Rules for premature withdrawal of money
SBI’s FCNR(B) Advantage Scheme does not allow premature withdrawal of funds during the first one year of deposit. However, if withdrawal is made after completion of one year but before three years, the customer will get 3.50 percent interest for the period for which the money is deposited in the bank. Whereas if the customer withdraws money after three years but before the completion of five years, then he will be given 1 percent less interest than the interest rate applicable for that period. Therefore, before investing, it is important to understand the rules related to duration and premature withdrawal.
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