Federal Bank Brings Special FCNR Deposit Schemes With 6.25% Interest Rates | Check Full Info

Federal Bank FCNR Deposit Schemes: Days after the Reserve Bank of India (RBI) announced special FCNR(B) swap facility, Federal Bank recently introduced a special foreign currency non-resident (FCNR) deposit scheme in US dollars. The new FCNR Deposit Scheme can offer an interest rate of up to 6.25% per annum for tenures between three and five years.

For those who are planning to invest in FCNR schemes, here are all the details about Federal Bank's new deposit scheme.

Federal Bank's New Deposit Scheme

Federal Bank is aimed at NRI customers who want to keep savings in foreign currency while earning a fixed return from an Indian bank. Those who are earning in US Dollars can reduce currency conversion risk compared with rupee deposits.

These FCNR deposits also come with a mandatory lock-in period of one year from the date of account opening. After the lock-in period, bank users can withdraw a partial amount.

Federal Bank FCNR Max Deposit Scheme | Key Things To Know

Bank customers will get a headline interest rate of 6.25% which is applied to US dollar deposits placed for three to five years. The bank has positioned the offer as a response to higher demand from NRI customers for stable foreign currency savings products with competitive yields.

The initiative is brought with an intention to strengthen bank's customer-focused offerings for NRI clients and enhance value in foreign currency savings products, according to Joy P V, Country Head - Retail Liabilities at Federal Bank.

Why FCNR Deposit Rates Are Rising Now?

Federal Bank's launch comes during a wider repricing of FCNR(B) deposits across the Indian banking sector. Several lenders have increased interest rates on US dollar deposits, particularly in the three- to five-year maturity band, as banks look to attract more foreign currency resources.

The momentum follows policy support from the Reserve Bank of India. The central bank announced a special FCNR(B) swap facility and exempted incremental FCNR(B) deposits mobilised between July 1 and September 30 from cash reserve ratio and statutory liquidity ratio requirements. These steps have improved the economics of raising such deposits for banks.

For banks, FCNR(B) deposits can provide access to foreign currency funding from a reliable customer base. For NRIs, these deposits offer a way to keep money in foreign currency with an Indian bank, avoiding immediate rupee conversion and the exchange-rate uncertainty that can come with it.

The rising rate competition is visible across private and public sector lenders. ICICI Bank and Axis Bank have raised dollar deposit rates to 6% across the three- to five-year bucket. Kotak Mahindra Bank is offering up to 6.15% for larger-ticket deposits, while YES Bank has raised rates as high as 6.60%.