RBI/2006-2007/351 RPCD.CO.RF.BC.No.79/07.38.01/2006-07 April
26, 2007 All State Co-operative Banks
(StCBs) and District Central Co-operative Banks (DCCBs) Dear
Sir, Interest Rate on Non-Resident (External) Rupee
(NRE) Deposits Please refer to our Circular RPCD.CO.RF.BC.No.44/07.38.01/2006-07
dated February 6, 2007 on Interest Rate on NRE Rupee Deposits. In the Annual
Policy Statement for the year 2007-08, announced on April 24, 2007 (extract of
paragraphs 114, 115 and 116 enclosed), it has been decided
that until further notice and with effect from close of business in India as on
April 24, 2007, the interest rate on Non-Resident (External) Rupee (NRE) Term
Deposits will be as under: The interest rate on fresh Non-Resident
(External) Rupee (NRE) Term deposits for one to three years' maturity should not
exceed the LIBOR/SWAP rates, as on the last working day of the previous month,
for US dollar of corresponding maturities (as against LIBOR / SWAP rates plus
50 basis points effective from close of business on January 31, 2007). The interest
rate as determined above for three year deposits will also be applicable in case
the maturity period exceeds three years. The change in interest rate will also
apply to NRE deposits renewed after their present maturity period. 2. The
other instructions as contained in our Circular RPCD.No.RF.Dir.BC 54/D.1-87/88
dated November 2, 1987 shall remain unchanged. An amending directive RPCD.CO.RF.BC.Dir.No.78/07.38.01/2006-07
dated April 26, 2007 is enclosed. Yours faithfully, (C.S.Murthy)
Chief General Manager-in-Charge Paragraphs
114, 115, 116 of the Annual Policy Statement for the year 2007- 08
Interest
Rate Prescriptions 114.In
the context of large capital inflows and implications for liquidity and monetary
management, there is a need to review the interest rate prescriptions related
to NRI deposits, viz., foreign currency non-resident (banks) (FCNR(B))
deposits and Non-Resident (External) Rupee Account (NR(E)RA) deposits, especially
in the light of inflation and interest rate differentials between India and the
rest of the world. In this context, the following measures are proposed: (a)Interest
Rates on FCNR (B) Deposits 115.Currently, the interest
rate ceiling on FCNR (B) deposits of all maturities has been fixed at LIBOR/SWAP
rates for the corresponding maturities minus 25 basis points for the respective
foreign currencies. In view of the prevailing monetary conditions, it is proposed: •to
reduce, with immediate effect, the interest rate ceiling on FCNR (B) deposits
by 50 basis points, i.e., to Libor minus 75 basis points. (b)Interest
Rate on NR(E)RA Deposits 116.Currently, the interest
rate ceiling on NR(E)RA for one to three years maturity should not exceed 50 basis
points above LIBOR/SWAP rates for US dollar of corresponding maturity. In view
of the prevailing monetary conditions, it is proposed: •to
reduce, with immediate effect, the interest rate ceiling on NR(E)RA deposits by
50 basis points, i.e., to LIBOR/SWAP rates.
RPCD.CO.RF.BC.Dir.No.78/07.38.01/2006-07 April
26, 2007 Interest Rate on Non-Resident (External) Rupee
(NRE) Deposits In
exercise of the powers conferred by Section 35 A of the Banking Regulation Act,
1949 (As Applicable to Co-operative Societies) and in partial modification of
Directive RPCD No.Dir.BC.53/D.1-87/88 dated November 2, 1987, as amended from
time to time, on Interest Rates on Deposits, the Reserve Bank of India being satisfied
that it is necessary and expedient in the public interest so to do, hereby directs
undernoted changes in the interest rates on Non-Resident (External) Rupee (NRE)
deposits: 'With effect from close of business as on April
24, 2007, the interest rates on fresh Non-Resident (External) Rupee (NRE) Term
deposits for one to three years’ maturity should not exceed the LIBOR /SWAP rates,
as on the last working day of the previous month, for US dollar of corresponding
maturities (as against LIBOR /SWAP rates plus 50 basis points effective from close
of business on January 31, 2007). The interest rates as determined above for three
year deposits will also be applicable in case the maturity period exceeds three
years. The changes in interest rates will also apply to NRE deposits renewed after
their present maturity period.' (V.S.Das) Executive
Director |