Banks increases interest rates sharply to attract NRE deposits

Now having economic slope down, the new strategy is being used to hike the price of value by The Reserve Bank of India is to deregulate interest rates on non-resident external (NRE) rupee deposits and ordinary non-resident accounts.

And there are many banks that have increased the interest rates on fixed deposits held by non-resident Indians (NRIs). Private lender Yes Bank has increased to 9.6 per cent from 3.82 per cent.

Beside this, the interest rate on non-resident external (NRE) rupee deposits to 9.25 per cent from 3.82 per cent has been fixed by IndusInd Bank.

But tremendous hike in rate of interest on NRE deposit has been made by the Lakshmi Vilas Bank that is fixed lender different terms.

If deposits under the maturity slab of one year to below two years, the rate will fetch 10 per cent from 3.82 per cent and of 2 years to below three years will fetch 8 per cent against 3.51 per cent and three years and above 7 per cent against 3.64 per cent. The bank has changed its rates from December 22.And by seeing this Karur Vysya Bank has also increased its rate to 10 per cent.

In a statement of Rana Kapoor, CEO, he said, “the higher rates, coupled with the dollar’s recent rise against the rupee, are sure to encourage foreign exchange inflows.”

It is to be expecting that such policy of RBI to hike rate on NRE deposits will surely encourage banks to attract dollars. Many banks have announced a steep increase in interest rates on fixed deposits held by non-resident Indians.

Moreover, beside these banks other banks are expected to announce their changing rate of interest in the coming days that are being offered on term deposits of 15 months 15 days to 16 months.

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