To provide greater flexibility to banks in mobilizing non-resident deposits and in view of prevailing market conditions, the Reserve Bank of India (RBI) deregulated interest rates on Non-Resident (External) Rupee (NRE) Deposits and Savings deposits under Ordinary Non-Resident (NRO) Accounts with effect from 16 December 2011. After the deregulation almost all banks increased their NRE term deposit rates in the range of 349-628 basis points across various maturities to align with domestic term deposits. In the post deregulation period up to 20.04.2012, Non-Resident Indians (NRI) deposit increased by 12.1 per cent (Rs.33,874 crore); and NRO deposits grew marginally by 1.9 per cent (Rs.1,199 crore). However, Foreign Currency Non Resident [FCNR(B)] deposit contracted by 3.8 per cent during the period. Further, with effect from 4 May 2012, RBI raised the interest rate ceiling on FCNR (B) deposit of banks from 125 basis points above the corresponding LIBOR/Swap rates to 200 basis points for maturity period of one year to less than three years, and to 300 basis points for maturity period of 3 to 5 years.
This information was given by the Minister of State for Finance, Shri Namo Narain Meena in written reply to a question in Lok Sabha today.