Banks Boost Interest Rates to Attract NRI Dollar Deposits

In a bid to attract non-resident Indian (NRI) dollar deposits, Indian banks have significantly raised interest rates on Foreign Currency Non-Resident (Bank) [FCNR(B)] deposits following RBI's special incentives. This move aims to bolster foreign currency inflows amid a competitive banking environment.

The race among Indian banks to attract foreign currency deposits from Non-Resident Indians (NRIs) has intensified. Following the Reserve Bank of India's (RBI) recent policy measures designed to enhance US dollar inflows, several banks have substantially increased interest rates on Foreign Currency Non-Resident (Bank) [FCNR(B)] deposits.

On offer is a range of new, higher interest rates from various banks. For instance, UCO Bank has raised rates to 7.20% for five-year deposits, while DCB Bank has set a rate of 7.13% for both three-year and five-year tenures, showcasing significant interest hikes to lure NRI investors.

The fierce competition extends to both large private and public sector banks, including ICICI and Punjab National Bank, which are now offering competitive rates to capture this market. Analysts expect these measures could channel between USD 35 billion to USD 70 billion in foreign inflows.