There is good news for NRIs and people who keep their savings in foreign currencies. State Bank of India (SBI)
and Bank of Baroda (BoB) have increased interest rates on FCNR(B) deposits, allowing customers to earn up to 6% interest on select deposits.
The move comes after recent measures by the Reserve Bank of India (RBI) aimed at attracting more foreign currency into the country.
SBI Launches New FCNR(B) Advantage Deposit Scheme
SBI has introduced a new FCNR(B) Advantage Deposit Scheme that offers higher returns on foreign currency deposits.
Under the revised scheme, deposits of up to $1 million will earn 5.25% interest for a tenure of 3 to 4 years. Customers investing for 4 to 5 years will receive 5.50% interest, while a 5-year deposit will earn 5.75%.
For deposits above $1 million, SBI is offering up to 6% interest on a 5-year tenure.
The bank expects the new rates to attract more foreign currency deposits from customers.
Bank of Baroda Also Increases FCNR(B) Rates
Bank of Baroda has also revised interest rates on FCNR(B) deposits across multiple foreign currencies.
The updated rates apply to deposits in US Dollar, British Pound, Euro, Australian Dollar, and Canadian Dollar.
According to the bank, customers can earn up to 6% on US Dollar deposits. Canadian Dollar deposits can offer up to 5.15% interest, while British Pound and Australian Dollar deposits can earn up to 4.75%.
The rate revision follows RBI’s recent steps to ease certain rules related to FCNR(B) deposits and foreign borrowing.
Know the Withdrawal Rules Before Investing
Investors should also pay attention to the premature withdrawal conditions before opening an FCNR(B) deposit.
SBI has clarified that these deposits cannot be withdrawn during the first year. If a customer withdraws funds after one year but before three years, the interest rate will be reduced to 3.50%.
For withdrawals made between three and five years, the applicable interest rate will be 1% lower than the original deposit rate.
Why FCNR(B) Deposits Are Becoming Popular
The latest rate hike has made FCNR(B) deposits more attractive for NRIs looking to earn better returns on their foreign currency savings.
With interest rates touching 6% at leading public sector banks, investors now have an opportunity to grow their savings while keeping their money in trusted banking institutions.
