The Hindu Business Line : RBI increases cap on NRE deposit rates

The Reserve Bank of India hiked the interest rate cap on Non-Resident External Rupee deposits to 75 basis points over LIBOR or swap rates for the US dollar from the earlier 50 basis points over LIBOR, with immediate effect.

In a press release today, RBI said the maturity period of repatriable NRE deposits would continue to be one to three years. The interest rate as for three-year deposits would be applicable in case the maturity period exceeds three years.

The cap on NRE deposits rates was last raised on November 1, 2004.

The changes in interest rates will also apply to repatriable NRE deposits renewed after their present maturity period.

The interest rate on NRE savings deposits will be at rates applicable to domestic savings deposits (as against the ceiling of LIBOR/Swap rates for six month maturity on US dollar deposits) effective close of business in India on November 17.

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