Following RBI’s Deregulation 5 Indian Banks raised Interest Rates on NRE Deposits

Reserve Bank of India deregulated non-resident external (NRE) deposits on 16 December 2011 allowing banks  to offer higher interest rates to dollar-denominated accounts. Reserve Bank freed the rates on non-resident external accounts, offering interest as high as 9.6% per annum.

Following RBI’s deregulation five Indian banks, including HDFC Bank and Yes Bank on 23 December 2011 raised their interest rates on such deposits in order to lure foreign money.

The Reserve Bank of India's move to deregulate interest rates on non-resident external (NRE) rupee deposits and ordinary non-resident accounts encouraged banks to attract dollars.

Private lender Yes Bank increased the interest rates on fixed deposits held by non-resident Indians (NRIs) to 9.6 per cent from 3.82 per cent. The new rate is being offered on term deposits of 15 months 15 days to 16 months. The bank also raised savings bank rate by 200 basis points to 6 per cent.

Lakshmi Vilas Bank revised the rate of interest for NRE term deposits with effect from December 22. Deposits under the maturity slab of one year to below two years will in fact attract 10 per cent from 3.82 per cent previously. Deposits 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.

IndusInd Bank increased the interest rates on NRE deposits to 9.25 per cent from 3.82 per cent.

Similar steps were also taken by banks like Federal Bank, HDFC Bank, State Bank of Travancore (SBT).
The new rates are effective from 24 December for fresh deposits as well as those being renewed on maturity.