It has now been decided that, until further
notice, the interest rates on Non-Resident (External) Rupee (NRE) deposits
for one to three years, contracted effective close of business in India on
April 17, 2004, should not exceed the LIBOR/SWAP rates for US dollar of corresponding
maturity.
The interest rate as determined above
for three year deposits would also be applicable in case the maturity period
exceeds three years. The changes in interest rates will also be applicable
to NRE deposits renewed after their present maturity period.
In order to provide consistency in the interest
rates offered to non-resident Indians, the interest rates on NRE deposits
were linked to LIBOR/SWAP rates for US dollar from July 17, 2003. The interest
rates on these deposits were reduced from 250 basis points above LIBOR/SWAP
rates of corresponding maturity on July 17, 2003 to 100 basis points above
LIBOR/SWAP rates of corresponding maturity on September 15, 2003 and later
to 25 basis points above LIBOR/SWAP rates of corresponding maruity on October
18, 2003.
Interest Rate on NRE Savings Deposits
With a view to aligning the interest rates
on various categories of NRE deposits, it has been decided to link the interest
rate on NRE savings deposits also to LIBOR/SWAP rates with effect from close
of business in India on April 17, 2004. The interest rates on NRE savings
deposits should not exceed the LIBOR/SWAP rates for six-month maturity on
US dollar deposits. The interest rate on NRE savings deposits may be fixed
quarterly on the basis of the LIBOR/SWAP rate of the US dollar on the last
working day of the preceding quarter. For the quarter April-June 2004, the
US dollar LIBOR/SWAP rate as on the last working day of March 2004 would be
applicable.
At present, interest rate on NRE savings deposits
is linked to domestic savings deposit rate whereas the interest rates on NRE
term deposits are linked to LIBOR/SWAP rates for US dollar since July 17,
2003.
Advance against NRE Savings Deposits