Dollar draw: Banks raise their FCNR (B) deposit rates sharply

A number of domestic banks, including State Bank of India (SBI), HDFC Bank, Central Bank of India, have raised the interest rates on Foreign Currency Non-Resident (Bank) or FCNR (B) deposits by over 250 basis points (bps).

- SUBRATA PANDA

SBI and HDFC Bank have increased their rates by up to 295 bps and 260 bps, respectively.

Karur Vysya Bank has raised the peak rate by over 300 bps to 7 per cent for three to five year deposits. AU Small Finance Bank has raised its peak deposit rate by 195 bps to 7.4 per cent.

The move comes after Reserve Bank of India (RBI) issued operational norms for this special FCNR (B) deposit scheme on Monday. Under the facility, RBI effectively absorbs the entire hedging cost on these deposits, estimated at around 3.5 per cent.

The country’s largest lender, SBI, has come out with a special scheme “SBI Advantage FCNR (B) deposit”, offering a peak rate of 6 per cent for deposits of over $1 million for a five year tenor.