| INTEREST RATE ON DEPOSITS UNDER NON-RESIDENT (EXTERNAL) RUPEE ACCOUNTS (NRE ACCOUNTS) |
In the past few months the RBI has announced the under noted changes in the interest rates on NRE term and savings Deposit Accounts.
| July 17 2003 | NRE Term Deposit rates capped at 250 bps over LIBOR |
| Sept 15 2003 | NRE Term Deposit rates capped at 100 bps over LIBOR |
| Oct 18 2003 | NRE Term Deposit rates capped at 25 bps over LIBOR |
| April 17 2003 | NRE Term Deposit rates to be priced at LIBOR/SWAP |
| NRE Saving Deposit rates also linked to LIBOR |
As on October 18, 2003 the interest rates on Non Resident (External) Rupee (NRE) Deposits for one to three years maturity, contracted effective close of business in India on October 18, 2003, should not exceed 25 basis points above LIBOR/SWAP rates for US dollar of corresponding maturity. On a review, it has now been decided that, until further notice, the interest rates on NRE Deposits for one to three years maturity, 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 rates 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 apply to NRE deposits renewed after their present maturity period.
(ii) Interest Rate on NRE Savings Deposit Accounts
With a view to aligning 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 rate for six months maturity on US dollar deposits and may be fixed quarterly on the basis of the LIBOR/SWAP rate of 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.
(iii) Advance against NRE Savings Deposits
It is clarified that since the account holder of NRE savings deposits can withdraw savings deposits at any time, banks should not mark any type of lien, direct or indirect, against these deposits.
