Banks have started to effect a downward revision on interest rate on non-resident Indian (NRI) deposits.
This follows the recent credit policy announcement of a 10 per cent imposition of cash reserve ratio (CRR) on the NRI
deposits.
Among the nationalised banks, Union Bank of India (UBI) has taken the lead. It has reduced the rates on non-resident external (NRE) deposits for six months upto one year to nine per cent from 12 per cent.
It has retained the rate of deposits between one year upto two years at 12 per cent. NRE deposits above two years and upto three years are also retained at 14 per cent.
It has also revised non-resident non repatriable (NRNR) deposits from six months upto three years to 16 per cent.
Bank officials attribute the revision to the imposition of CRR. The imposition of CRR will make it costlier for the bank to hold the deposits as the bank does not earn much of a spread from NRI deposits.
Most of the dollar funds are converted into rupees and lent at the going interest rate.
However, Scotiabank has raised the rates on deposits of maturity of 18 months to two years while it has lowered the rate on deposits above two years.
It has revised the rate on local/non-resident ordinary accounts to eight per cent from six per cent for deposits of 30 days to 90 days, the rates for 91 days to one year are nine per cent, one year to 18 months at 12.5 per cent. Above two years to five years is retained at 13 per cent.
Scotiabank has revised the rates on NRE deposits with maturities above one year by 100 basis points to 12 per cent for deposits between one year and two years, and 13 per cent for deposits above two years but upto three years.
It has imposed a standard rate on non resident non repatriable accounts of 12 per cent for deposits of all maturities.
Meanwhile it has left its foreign currency non resident -banks FCNR-B rate unchanged.
