RBI to cut swap rates on foreign currency deposits from March 1

MUMBAI (Reuters) - The Reserve Bank of India will cut the ceiling on its swap windows for 3-5 year foreign currency non-resident deposits FCNR-(B) by 100 basis points from March 1, the central bank said on Friday.

The new rates will be LIBOR/Swap plus 300 basis points, down from LIBOR/Swap plus 400 bps earlier for maturities of three to five years, the central bank said.

That returns the ceiling on its swap windows for these maturities to the same levels as before August last year. The central bank had raised the ceiling to LIBOR/Swap plus 400 bps to help attract more inflows from abroad.

The ceiling on its swap windows for FCNR-(B) of more than one-year but less than three-year maturities will remain at the existing LIBOR/Swap plus 200 basis points.

Separately, the central bank also extended the timeline for banks offering variable interest rates on incremental non-resident external (NRE) deposits until February 28 from January 31.

However, from March 1, the rates will have to be set at par with comparable local interest rates for rupee deposits, the RBI added.

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(Reporting by Neha Dasgupta; Editing by Rafael Nam)