Citi mops up $1mn via forex deposits

Indian cricket fans might hate the Australian team, but as depositors they have taken a fancy to Australian dollar deposits as Citibank found out on Day One of introducing global financial products.

The bank, which was the first off the cuff to introduce foreign exchange deposits for the 'global' Indian, mopped up $1 million on the first day. The interest rate on Aussie dollar deposits has been pegged at 6.25 per cent.

What's more, the bank intends to offer capital-guaranteed products linked to equity funds. Indian customers will also soon be able to buy foreign currency bonds issued by the likes of Reliance and the Tatas, said Amit Sah, marketing director, retail banking, Citibank.

Capital-guaranteed mutual fund products "" ensuring customers the return of capital in the unfortunate likelihood of equity market going under "" are not allowed in India and have been banned by the Association of Mutual Funds of India.

Similarly, with a number of corporates eyeing external commercial borrowings to raise funds, Indians will be able to participate.

Sah said: "We have booked about $1 million from about 175-200 Citibank customers. Majority of them have opted for deposits in pound sterling and euro."

There has been an encouraging response with the average deposit size of $10,000, he added, as "customers are keen to diversify their wealth and try out forex products, many for the first time."

Citibank offers 1 per cent higher interest over Libor on its forex deposits as part of a special promotion exercise for two months.

It is offering 2 per cent on dollar deposits, 3 per cent on euro deposits and 4.75 per cent interest on deposits in pound sterling. The minimum deposit amount is at $1,000 or the equivalent.

While the promo-rate is valid only for two months, Sah anticipates that many customers will not necessarily roll over their deposits, but look at newer products.