Reserve Bank of India has increased the interest rates on new non-resident (external) rupee (NRE) term deposits by 100 basis points and on FCNR (B) deposits by 25 basis points, with immediate effect.
This move is expected to bring in more foreign currency through retail deposits.
According to the notification issued on Wednesday, NRE term deposits for one to three years maturity should not exceed the LIBOR/SWAP rates plus 275 basis points, for US dollar of corresponding maturities, as against LIBOR/SWAP rates plus 175 basis points. The changes in interest rates will also apply to NRE deposits renewed after their present maturity period.
In respect of FCNR (B) deposits of all maturities interest shall be paid within the ceiling rate of LIBOR/SWAP rates plus 125 basis points for the respective currency/corresponding maturities, as against LIBOR/SWAP rates plus 100 basis points.
On floating rate deposits, interest shall be paid within the ceiling of SWAP rates for the respective currency/maturity plus 125 basis points. For floating rate deposits, the interest reset period shall be six months, RBI said.