Banks Hike Interest Rates on Non-Resident Rupee Term Deposits Amid Rupee's Depreciation

The depreciation of the rupee has led to a surge in non-resident Indians (NRIs) remitting funds back to India, prompting domestic banks to increase interest rates on non-resident rupee (NRE) term deposits. The Reserve Bank of India deregulated NRE term deposit rates on December 16, allowing banks to offer higher rates. Several major banks, including State Bank of India, Punjab National Bank, and Kotak Mahindra Bank, have raised their interest rates on NRE term deposits, with some offering rates as high as 10% for short-term deposits.

Key Takeaways:

State Bank of India (SBI) has increased its interest rate on NRE term deposits to 9.25% from 3.51% to 3.82% on various tenures, and also extended the maximum tenure to 10 years.
Punjab National Bank has revised its interest rate to 9.25% on all tenures between one and five years.
Kotak Mahindra Bank has raised its offering to 9.25% for tenures between one and two years, and 9% on deposits between two and three years, and 8.5% on deposits between three and five years.
Laxmi Vilas Bank is offering 10% for a tenure between 1-2 years.
HDFC Bank announced an offering of up to 9% on NRE term deposits, and State Bank of India has its offering at par with domestic term deposits.
ICICI Bank has kept its revised rates at 6.5% and is expected to further revise its rates as other large banks have raised their rates significantly higher.

Statistics:

2.5 times increase in interest rates offered by banks on NRE term deposits.
Interest rates now range from 6.5% to 10% depending on the tenure and bank.
The Reserve Bank of India deregulated NRE term deposit rates on December 16.
Maximum tenure on NRE term deposits has been extended from 5 years to 10 years by State Bank of India.

Sources:

"Banks hike rates on NRE deposits", published in The Indian Express Online Media Ltd. on [No publication date mentioned in the original text].
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