DBOD.No. Dir.BC.35/13.03.00/98

April 29,1998

Vaishakha 9,1920 (Saka)

Interest Rates on Deposits held under Foreign Currency Non-Resident Accounts (Banks) Scheme

In exercise of the powers conferred by Sections 21 and 35A of Banking Regulation Act, 1949, the Reserve Bank of India, being satisfied that it is necessary and expedient in the public interest so to do, hereby directs that :

I.Interest Rates

 The existing paragraph (vi) of Directive DBOD No. BC.115/13.01.09/93 dated April 29, 1993 as amended from time to time, realting to deposits accepted under Foreign Currency Non-resident Accounts (Banks) Scheme, shall be subjected as under:

(i)                         in respect of deposits of six months and above but less than one year, and floating  rate deposits , interest shall be paid at a rate not in excess of LIBOR minus 25 basis points for the respective currency/maturity. For floating rate deposits , the interest reset period shall be six months.

(ii)                      In respect of deposits of maturity of one year and above, the interest shall be paid within the ceiling of Swap rates for the respective currency/maturity plus 50 basis points.

(iii)                   The LIBOR/Swap rates as on the last working day of the preceding week would form the base for fixing the ceiling rates for the interest rates that would be offered effective the following week.

II. Payment of Interest on Overdue FCNR Deposits

The existing paragraph 5 of  Bank’s Directive DBOD No. Dir. BC. 95/C.347(I)-86 dated September 11,1986 as amended from time to time, shall be modified as under:

The bank may, at its discretion, renew an overdue deposit or a portion of thereof provided the overdue period from the date of maturity till the date of renewal (both dates inclusive), does not exceed 14 days and the rate of interest payable on the amount of the deposit so renewed shall be the appropriate rate of interest for the period of renewal as prevailing on the date of maturity or on the date when the depositor seeks renewal , whichever is lower. In the case of overdue deposits where the overdue period exceeds 14 days and if the depositor places the entire amount of overdue deposit or a portion thereof as a fresh FCNR (B) Deposit,banks may fix their own interest rates for the overdue period on the amount so placed as a fresh term deposit.

2. All other provisions of Directive DBOD.No. Dir.BC.95/.347(I)-86 dated September 11, 1986 and DBOD.No.Dir.BC.115/13.01.09-93 dated April 29, 1993, as amended from time to time , shall remain unchanged.

3. The effective date on such changes shall be announced by banks as early as possible.

 (S. Gurumurthy)

Executive Director