Banks increase interest rate on NRE deposits

Private sector lenders like HDFC Bank, Yes Bank, Dhanlaxmi Bank and the state-run Allahabad Bank today steeply increased the interest rates on select maturities of NRE deposits.

HDFC Bank increased the interest rates on NRE deposits of Rs 1 crore and above with a maturity of one to two years to 9% as against 3.82% earlier. It has, however, left the NRO deposit rates unchanged.

Yes Bank, too, increased the rate on NRE accounts by 2 percentage points to 6% for up to Rs 1 lakh and by 3 percentage points to 7% for over Rs 1 lakh.

The state-run Allahabad Bank, too, today announced a spike in its NRE deposits up to 7.5%. The Kolkata-based bank will now offer 7.5% for one to two years tenor (against 3.82% earlier), 7% on deposits of two to three years (from 3.51%), and 6.75% for those above three years (from 3.64%).

HDFC Bank NRE Services Head Abhay Aima told PTI that the bank has increased the interest on deposits above Rs 25 lakh to 8.5% for tenor under two years. The bank has an NRE deposit base of Rs 7,100 crore.

He also said there has been a considerable spike in the inflows since the rupee fall and opined that such high rates will not last long.

The Thrissur-based Dhanlaxmi Bank too hiked interest rates on NRE deposits to 8% for a maturity of one to three years effective December 26 while the rate for deposits for three years and up to 10 years will be 7.75%, the bank said in a release.

Earlier this week, the Kochi-based Federal Bank and Lakshmi Vilas Bank had also increased their rates on these deposits.

On December 16, Federal Bank hiked the interest rates on NRE deposits for 1 year to 6.5% from 3.82% and left the rates on other deposits unchanged. It also said the new rates will be applicable for a limited period from December 19 to 31.

Similarly, another Kerala based lender Lakshmi Vilas Bank had revised the interest rates on NRE deposits of various slabs yesterday. For one year and under two years, it is offering 10%, 8% for deposits of two to three years and 7% for deposits above three years.