State Bank of India and ICICI Bank have recently raised interest rates on their foreign currency non-resident (FCNR(B)) deposits soon after the RBI lifted interest rate caps on such deposits, Economic Times reported.
SBI has hiked its deposit rates for various currencies between 25 basis points and 85 basis points, while ICICI has raised the bulk deposit rates by a minimum of 75 basis points.
Both the banks have raised rates on US dollar deposits by the steepest 85 bps. Foreign currency deposits are mostly used by non-resident Indians (NRIs). The US dollar followed by the UK pound and the Canadian dollar are the most sought-after currencies, the report said.
SBI is now offering 2.85% on FCNR(B) US dollar deposits above one year but less than two years, up from 2% earlier, and 3.25% on five-year deposits, up from 2.45% earlier. ICICI is offering 3.35 % on $350,000 and above for one year to less than two year US dollar deposits, up from 2.50% earlier, it further said.
SBI managing director-retail Alok Choudhary said the bank expects an increase in inflows after the hike.
“The hikes are already effective and are substantial. We have also hiked rates for deposits denominated in pounds, Canadian dollars and Australian dollars. The funds raised through this route will be used mostly to fund foreign currency borrowings by companies. We will market the product to NRIs and expect to garner more inflows than before,” Choudhary told ET. The SBI hike came into effect from July 10.
ICICI has so far hiked rates on bulk deposits above $350,000 with the rates on US dollar-denominated deposits increased by 85 bps while those for the Canadian dollar and UK pound increased by 75 bps each.
HDFC Bank had increased rates for bulk deposits above $1 million before the RBI announced its measures on July 6.