Banks In A Fix Over Nre-Libor Linkage

The linking of non-resident external rupee (NRE) deposit rate to the London inter-bank offer rate (Libor) has put the banking sector in a quandary even though some banks have already cut rates.

The fluctuations that the (Libor) is subject to could pose problems in communicating the changes immediately to the vast network of branches as also increase the tedium of calculations in arriving at the interest payable, senior bankers said.

The banks, instead, will feel comfortable if the Reserve Bank of India (RBI) announced the NRE deposit rates at monthly intervals.